COP21 The Talking Continues

An audio version of this episode was published on 11th December 2015 and is available at www.susbiz.biz

This week the Energy Minister and the Prime Minister have been under fire as COP21 moves forward. While the main negotiating sessions continue, many other meetings take place as well. Mark Carney of the Bank of England has a view. The group of 77 nations  (G77) plus China has a view as well, and so do the 48 Least-Developed Countries. Caroline Lucas of the Green Party is concerned. Can we standardise climate change? Is emissions trading the answer? George Monbiot believes that that's attacking the problem from the wrong end. Jeremy Leggett is not at all happy with Minister Amber Rudd as you will learn from the latest chapter of his book, and the week will end with a massive march through the streets of Paris. I’m a member of iema and that entitles me to a daily update on the conference from the environmentalist magazine. Non-members can subscribe at  environmentalistonline.com. But we have our own man on the spot in Paris. You’ll hear from Richard Lane later on.

First of all: it’s beginning look a bit like - 99p for a litre of petrol by Christmas. The oil price has fallen 60% since summer 2014 and Goldman Sachs are still predicting the $20 barrel. This week Brent crude was at $42 and West Texas Intermediate down to $38. Since 2011 the Chancellor has suspended the fuel price escalator. In the face of falling oil prices an additional 1p on a litre of petrol or diesel would be pretty painless. But the government estimates that freezing the escalator has reduced taxation income by some £23bn over the life of the last Parliament. Isn’t that approximately twice what the Chancellor intends to take out of the welfare budget? You can make up your own mind as to whether this was the right place make cuts.

The Prime Minister and cabinet members have been criticised this week for flying to the Paris climate change talks, rather than taking the more environmentally friendly Eurostar train. David Cameron and Energy and Climate Change Secretary Amber Rudd flew the short trip to the opening day of the talks last Monday. International Development Secretary Justine Greening and her team also took a flight for her short trip to the COP21 talks on Saturday

According to Eurostar, a short haul return flight from Heathrow to Charles de Gaulle airport emits 122 kilograms of CO2 per person, compared with the 10.9 kg CO2 emitted per Eurostar passenger travelling from St Pancras to the centre of Paris. On such a short journey, city centre to city centre times are likely to be shorter by train than by air. Most of the team went back by train, so perhaps the criticism worked.

According to Independent Catholic News, Catholic campaigners have called on the UK government to heed the message of Pope Francis as the Secretary of State arrives in Paris to join the second week of the climate talks.

"David Cameron's speech last Monday,” they say, “called for a strong deal that guarantees adequate climate finance for the world's most vulnerable people and a five year review mechanism to measure and improve progress. We look forward to Amber Rudd rolling her sleeves up and getting involved to make this deal happen."

And Caroline Lucas of the Green Party has a message for Amber Rudd as well. Her open letter to the minister starts like this:

“HUMAN RIGHTS AND GENDER EQUALITY IN THE PARIS AGREEMENT ON CLIMATE CHANGE

“I am writing to express my concern regarding reports from the COP21 negotiations that the language on respect for human rights and gender equality is at risk of being removed entirely from the operative section of the Paris Agreement. Climate change represents a gross social injustice, and establishing overarching principles of climate justice, human rights and gender equality at the heart of the climate agreement will be a prerequisite for effective climate action. I urge you to ensure that the UK in particular is playing a constructive role in upholding a strong EU position on this issue.”

Paul Polman, chief executive of Unilever, aims to make the company "carbon positive" by 2030, using only renewable energy. He didn’t mention Amber Rudd. Well, not directly.

Speaking to BBC News this week he said he was concerned that the government's decision to remove financial support for wind and solar power would send the wrong signal. Subsidies cannot be permanent, but equally they should not be withdrawn at short notice. There is a risk that cutting subsidies sends the wrong message to investors, who are looking for stability. The government has been inconsistent. 

“We deal with 2bn consumers every day,” says Polman. “No government deals with 2bn consumers. If we are all to achieve our targets, government and business must work together.”

It seems pretty clear that without private sector support, governments will struggle.

So what’s been happening in Paris? Apart from the governmental negotiations there are many other organisations which have come to Paris to lobby and discuss climate change. A great deal has happened. For example,

Ninety businesses and 19 governments have signed up to a World Bank coalition to support the introduction of carbon prices. BT Group, EDF, Lafarge, Nestlé, SSE, Unilever and Veolia are among the companies joining the coalition, which will collect and share best practice, mobilise business support and convene talks with global leaders to overcome barriers to more widespread use of carbon pricing. 

They are backed by the governments of Sweden, the Netherlands, Ethiopia and Mexico, among others. Canadian environment minister Catherine McKenna announced that the country’s government, elected last month, would support the coalition. 

World Bank president Jim Yong Kim pointed to China’s plans to introduce a carbon price in 2017, and said: “Anyone who wants to do business with China will have to change the way they work.”

According to the Financial Times, the preferred solution is a cap and trade system. Such schemes already exist. EU ETS, the European union emissions trading scheme, is an example. Unfortunately, it's a bad example because it has done nothing to reduce carbon emissions. Cap and trade involves governments issuing carbon credits which are effectively a licence to emit carbon dioxide. The idea is that the cost of extra credits will put a burden on old and dirty plants, reduce their viability and lead them to be phased out. More efficient plants will need less credits and may even have a surplus to sell, giving them a financial and competitive advantage. In practice, EU ETS has been subject to fraud and manipulation. The price of carbon credits, which has collapsed to less than €4 per tonne, provides  little incentive to industry to clean up.

This week the International Standards Organisation (ISO) and the Greenhouse Gas Management Institute (GHGMI) held a panel discussion on the sidelines of the Paris talks. 

Tom Bauman, co-founder of the GHGMI and chair of a technical committee working on climate change mitigation and adaptation standards at the ISO, said that it had received a large number of requests over the past 18 months for new climate change standards. 

Nick Blyth, policy and practice lead at IEMA, said that the demand for new standards was driven partly by a general increase in awareness of the impacts of climate change as well as the publication of the revised ISO 14001 environmental management standard. The revised 14001: 2015 standard requires organisations to consider the impact of the environment, including climate change, on their operations as well as their impact on the environment.

“The revised ISO 14001 should introduce more people to climate change, which will then lead them into the scope of other GHG standards,” he said. 

More than 324,000 organisations worldwide were certified to 14001 in 2014, according to the ISO’s latest figures. The high rate of use is bringing climate change into mainstream environmental management systems, Blyth added. 

The negotiations are not all about mitigation; measures to reduce or slow down climate change. They are also about dealing with the consequences. Discussions over which countries will pay for damage caused by climate change are slowing down negotiations, with the G77 plus China group issuing a new warning that the issue threatens chances of a deal.

The G77 plus China negotiating bloc, which now consists of 134 countries, including Saudi Arabia and South Africa, complained about attempts by developed countries to widen the pool of donor nations that would contribute finance. The developed nations argue that developing countries “in a position to do so” should also contribute to funds to pay for climate change damage. 

In a strongly worded statement, ambassador Nozipho Mxakato-Diseko of South Africa, which chairs the bloc, said: “The G77 and China is deeply concerned with the attempts to introduce economic conditions in the finance section currently under negotiation … Any attempt to replace the core obligation of developed countries to provide financial support to developing countries with a number of arbitrarily identified economic conditions is a violation of the rules-based multilateral process and threatens an outcome here in Paris.” 

Countries most at risk from climate change joined the debate and warned that there would be no overall agreement in Paris unless a mechanism to deal with the impacts of climate change beyond adaptation is agreed.

The Least Developed Countries (LDC) negotiating bloc comprises 48 of the world’s poorest countries including many African countries and low-lying island states. Its members face severe disasters from climate change that are predicted to cause damage for which adaptation will not be possible. This is known as “loss and damage” and includes salination of agricultural land and loss of land to the sea.

Pa Ousman Jarju, minister of environment and climate change for the Gambia, said: “We do not foresee an outcome in Paris without loss and damage. It is a red line for us.”

Jarju said that the bloc had been encouraged by some of the statements by world leaders made at the start of the Paris talks, but said that this had not filtered through to negotiations. “We have seen a lot of bracketing,” he said, referring to the practice of using square brackets throughout the draft text to indicate options on the table where no decision has been reached. More about this in a moment.

Last Friday, Mark Carney, Governor of the Bank of England, launched the Task Force on Climate-related Financial Disclosures (TCFD) to develop voluntary, consistent climate-related financial risk disclosures by companies. This would provide lenders, insurers, investors and other stakeholders with important long-term information, he said. Carney has already warned about the danger from stranded assets, fossil fuel reserves which cannot be exploited without emitting unsustainable levels of emissions and which are therefore potentially worthless.

The taskforce will be chaired by UN special envoy for climate change and former mayor of New York Michael Bloomberg. It will consider what constitutes effective corporate financial transparency on climate change to understand the physical, liability and transition risks, and will review and learn from existing disclosure processes. 

Paul Simpson, chief executive of the CDP, (formerly the Carbon Disclosure Project), which has been working on climate change-related disclosures for investors for 15 years, welcomed the announcement. “We see it as a way of elevating our work and some of the information we collect right into the heart of financial markets and central banks. Carney is governor of the Bank of England and chair of the Financial Stability Board so that’s a much stronger angle into banks on climate than there’s been before. It will take disclosures to the next level,” he said.  

Proposals by the Treasury to scrap regulations requiring companies to report greenhouse-gas emissions in their financial reports as part of its business energy efficiency tax review were very worrying, Simpson said. But these could now be under review following Carney’s high-profile speech to the city and the creation of the taskforce, he added. 

“We very much hope that due to Carney’s focus on this issue, Osborne and the Treasury will see sense and realise that investors need this information, in fact they need more information than just GHG emissions. We’re hopeful that it will cause a u-turn from Osborne.” 

Not another u-turn, surely.

More than 100 companies including Ikea, Coca-Cola, Walmart and Kellogg have pledged to set emissions reduction targets in line with scientific assessments on how to keep temperature rises below 2°C.

Corporate science-based targets are being advocated by a coalition consisting of the World Resources Institute (WRI), the CDP, the UN Global Compact and WWF.

Speaking at a side-event on science-based targets at the UNFCCC talks in Paris, Kevin Moss, business centre director at the WRI, said typically, companies would set emission reduction targets in line with what they thought they could achieve, and then stretched themselves slightly so they knew they would meet the target.

“Science-based targets start with the principle that what we are trying to do is solve the problem of catastrophic climate change and there isn’t really a half way point to avoiding catastrophic climate change, you’re either on a trajectory to meet it or you’re not.

“If you’re making the effort to reduce emissions, it’s worth making that little bit extra effort to avoid catastrophic climate change,” he said.

A new draft agreement was announced at COP21 this week. I heard that the previous 50 pages had been reduced to 20. The copy I downloaded ran to 48 pages - still full of bracketed alternatives. For example:

. Article 2bis (GENERAL)

1. [All Parties [shall] regularly prepare, communicate [and implement] [intended] nationally determined [contributions][components] [on [mitigation] and adaptation]…

…you get the idea. And that’s just one clause. Still plenty to do before the close of business on 11th December. And I think it will take a long time to understand what the final agreement actually amounts to.

George Monbiot is a climate campaigner, a Guardian columnist and author. Last Friday he appeared on Any Questions, the BBC Radio 4 current affairs debate. He stated that the UK has a legal requirement to exploit fossil fuels, which seems totally at variance with managing emissions. I tracked this down to an article he wrote in January, referring to what is now the Infrastructure Act 2015. Article 41 of this Act is indeed headed “Maximising recovery of UK petroleum” and it requires the Secretary of State to produce one or more strategies for enabling that objective to be met. That’s the same secretary of state who is responsible for reducing carbon emissions. Also in the article, George Monbiot takes issue with the idea of reducing carbon emissions by penalising the consumer. Instead we should tax the producer of fossil fuels. In his words, “Let’s control carbon emissions at the wellhead, not the tailpipe.” Whether that will happen in Paris is open to question. For the moment a carbon cap and trade scheme seems more likely, with all its shortcomings.

I suggested last week that the US would resist any agreement that was legally binding. The good news is that President Obama said he would accept a legal obligation to review the progress towards carbon reduction every 5 years. That’s a start, but in my view reviews should begin much sooner and be more frequent. On the other hand, the Indian Environment Minister said that his country was embarking on a 10-year project and there would clearly be no need for review for 10 years. What business could set out on a 10-year plan without review? If there are any you’ve probably never heard of them because they failed in the first few years.

The latest episode of Jeremy Leggett’s book “The Winning of the Carbon War” came out this week. It’s a free download from jeremyleggett.net. It’s nearly finished. The last chapter will be out in January and will end with an assessment of what was achieved by COP21. Jeremy leads one of the original and biggest solar energy companies in the UK. He is has it in for Amber Rudd as well. Here’s a quotation from his latest chapter.

“The government is engaged in a scorched earth assault on solar now, it seems. They want no opposition to gas and oil, fracked from British shale or otherwise produced at home and abroad. They seem unembarrassable by their willingness to shovel large subsidies to shale and nuclear while torpedoing solar subsidies.

“Two days ago somebody in either the civil service or the Tory party leaked a letter from Amber Rudd to ministerial colleagues. It shows that in June, when she insisted that the UK was on track for its legally binding European commitment for renewables in the energy mix, she misled Parliament. Now she admits that the government is on course to miss the target by some distance. She suggests some shameful ways of wriggling out of the commitment, like somehow creating renewable energy credits abroad so as to claim the targets have been met.

“Today, facing calls for her resignation, she has given an interview insisting that she still has the confidence of the renewables sector. I know of no leader in the renewable sector whose view deviates much from derision. The whole spectacle has descended beyond farce.”

Well, all this is politics, horse-trading and shenanigans. Does it really matter to you, me and the man in the street what goes on in Whitehall or what gets decided in Paris? Yes, it does. Is there anything we can do about it? It’s the difference between mitigation and adaptation. Governments and global corporations can mitigate. You and I have to adapt. Having said that there are many brave people in Paris running parallel events and demonstrating their demands for a fair and effective agreement from COP21. The short-term interests of the less-than-1% cannot determine the futures of the rest of the world, they say. Next Saturday, 12th December, they take to the streets of Paris to demand that all countries should keep to the pledges made at COP21 and ideally do even better. No, I won’t be there. No excuses and I’ll probably regret it. It’s going to be part of history. I’ll be there in spirit.

One person who is there is Richard Lane, President of York Community Energy. Here’s his report:

"Basically: almost everything we're doing is wrong! The Clean Development Mechanism and the Green Climate Fund are both deeply suspect and causing the sort of popular resistance that we have seen when huge windfarms get imposed on people without their consent in the UK. The draft text of the Paris agreement only mentions the word "energy" once - that's in the phrase "International Atomic Energy Agency". The US has been fighting against the inclusion of a clause referring to the "loss and damage" due to climate change (which would of course signify the recognition of responsibility), but more recently has given way on this issue provided it is made clear that there will be no means to make them liable for any sort of reparation. The South African spokesperson of the G77 has been very outspoken, resulting in a lot of behind-the-scenes threats and pressure being applied to other G77 members to rein her in. At the moment it looks like this approach is being successful in breaking up the unity of developing countries.

"A new version of the text will be released on Wednesday 9th December. There is still hope that the final target could be 1.5degC but there is no hope of a legally binding treaty - or indeed any updating of INDCs that would get us closer to that from the current 3degC or so.

"I actually missed the daily debrief today because I was due to videocall in to the York Environment Forum meeting which nearly didn't work due to a combination of technical problems & lack of skill their end and difficult environment my end.

"I met a lot of activists in community energy - there are moves to try to connect up the community energy movement worldwide.”

More from Richard, I hope, later in the week.

Meanwhile, back at work, back in the office, are you confident of the future, or do you have a 10-year plan which means you don’t have to worry about anything for another 9 years or so? If you want a review before then, if you want to chat about sustaining your business and bolstering your competitive position for even more than the next 10 years, give me a call, especially if you’ve still got some mince pies left.

I’m Anthony Day and I’m on 07803 616877.

That was the Sustainable Futures Report. This is Anthony Day. There will be another episode next week.

Going Underground

Published as a podcast at www.susbiz.biz on Friday 27th November 2015

Although recent episodes of the sustainable futures show might lead you to think that it's all about energy, that's certainly not the case. This week I do talk about energy, potential energy under our feet, and also about water, groundwater. Desalination, solar energy, failing monsoons, Moroccan salt and Californian almonds are also on the agenda. And the UK has abandoned plans for carbon capture and storage.

Hello. This is Anthony Day, and this is the Sustainable Futures Show for Friday, 27 November 2015. And from next month it's going to be called the Sustainable Futures Report.

Running Out

According to a report in Nature Geoscience we are running out of groundwater. Groundwater is the one third of the world’s freshwater which is below the surface of the earth. We are using it up more rapidly that it is being replaced. And less than 6% of the water in the top 2 km of the earth’s surface  is renewed in a human lifetime. Some groundwater is rapidly renewed by rainfall and is only a few months old. Other reserves of groundwater can be millions of years old.

In California groundwater from boreholes is used for agriculture. A farmer interviewed by Capital Public Radio reported that the water level in his well was falling by 800 mm each year. Not surprising when you consider that California is in its fourth year of drought. This farmer had decided to do what he could to replenish the groundwater by flooding his crops whenever there was heavy rainfall and surplus water. He was prepared to invest millions of dollars to divert floodwaters to irrigate his crops with far more than they needed so that the water would percolate away through the sandy soil and down into the aquifers. 80% of the world’s almonds are produced in California and the Almond Board is looking at flooding the plantations in order to restore the groundwater there. The problem is that not all agricultural soils are permeable and it is not clear whether all crops will accept excess water. There will also need to be canals and pipes installed to divert the floodwaters. The original farmer was growing grapevines and the excess water did not damage the crop and might even have slightly improved it. Elsewhere in California there is growing tension between farmers as they drill deeper wells in order to secure their own supplies.

The University of the United Arab Emirates reports that Abu Dhabi is likely to exhaust its groundwater completely within 15 years. At the moment 98% of drinking water in the emirates comes from desalination plants. The problem with this is that the process uses substantial amounts of energy, usually natural gas, and the hot liquid which is pumped back into the sea as a byproduct damages the marine ecosystem. Citizens of the emirates use on average 500 L per day each, which is one of the highest rates of consumption in the world. The government admits that the price of water is too low which leads people to have no concern about wasting it and they don’t bother about leaks. Raising prices could go part way to solving this problem and the Emirates are also introducing solar powered desalination plants which will not use gas and presumably will not produce CO2 emissions either.

According to the Times of India, Pune, south-east of Mumbai, is also suffering from falling groundwater levels. The 2015 monsoon was weaker than usual and some areas received as little as 50% of normal rainfall. In 2014 some 6,000 villages saw water in their wells fall by a metre or more. In 2015 this had more than doubled to 13,500 villages. Of these, nearly 3,000 saw the level fall between 2m and 3m and over 4,000 saw the level fall by more than 3m. These villages are on the brink of severe drinking water shortages. The authorities have banned deep wells in 80 locations and say they will have to recharge the aquifers, although it is not clear how they will actually do it.

All these places may be far from home, but that doesn't mean that we won't suffer water shortages in Europe. All too often our problem is too much water, rather than drought but how far do you and your business rely on water? Do you actually know where your water supply comes from? Probably yes, if you’re a farmer. Otherwise it might be worth finding out. In a future episode I plan to review the book “Let there be water” by Seth M Siegel. You can find it at sethmsiegel.com .

Unconventional Energy

Paul Younger is Rankine Chair of Engineering and Professor of Energy Engineering at School of Engineering, at the University of Glasgow. He was interviewed by Jim Al Khalili at the recent freethinking festival. He said his main concerns were keeping the lights on and keeping carbon emissions down. We urgently need to find new sources of energy. We need to find the lowest carbon alternatives and it is urgent because of continuing and increasing fuel poverty and the risk of winter blackouts. He was scathing about an energy policy which has left us with a very narrow safety margin in the event of a severe winter. Have I mentioned that before? What alternative energy sources do we have? As a geologist, Professor Younger has investigated geothermal energy and drilled boreholes deep into the earth. Anyone who has been down a coal mine knows that the deeper you go the warmer it gets. Deeper still and the rocks get extremely hot. It is possible to harness this heat to raise steam and generate electricity, but in many cases it is more efficient to use the heat as heat. Looking at the U.K.'s energy consumption, only one fifth of energy is used as electricity, 2/5 are used as heat and the remainder is used for transport. While it might be possible to use geothermal energy for combined heat and power, the main potential is for running district heating systems. This means that alongside the gas pipes, the water pipes and the electricity cables we would have a hot water main feeding the central heating of each property. It's a system which works well in other countries and if we have a source of free, zero carbon heat it's an opportunity to be seriously considered. Although test drillings have proved that the heat is there, the projects have run out of money.

In Africa, however, notably in Ethiopia, geothermal energy is providing clean, cheap electricity to communities that had little or none before.

Another potential source of energy is underground coal gasification (UCG). This involves drilling into very deep coal seams, way beyond the reach of conventional mining, oxidising the coal and extracting the gas. In fact, this gas would be more important as a source of chemical feedstocks than as a fuel. Many fertilisers, pharmaceuticals and fabrics that we all take for granted are manufactured from hydrocarbons: oil or gas. If we do use gas from this source for energy, the carbon dioxide could be re-injected into the exhausted coal seams. If everything could be done on-site then this would remove the need for long pipelines which seem to be part of the current carbon capture and storage initiatives. Current CCS plans involve piping the CO2 across the country and injecting it into caverns under the North Sea.

At least that was the plan. 

At the same time as the Chancellor, George Osborne, was delivering his Autumn Statement to Parliament this week, the Department of Energy and Climate Change was making an announcement to the London Stock Exchange. It said that the £1bn prize fund for the first company to develop commercial-scale carbon capture and storage was withdrawn with immediate effect. The pilot projects at Drax and Peterhead will not now go ahead, putting an end to four years of research and preparation. The schemes would have generated 2,000 construction jobs at Drax and 100 permanent positions, and a further 600 jobs at Peterhead. You could argue that with last week’s re-announcement of the closure of coal-fired power stations, carbon capture and storage is no longer needed. However the 25 gas fired power stations which they are planning to build will all emit greenhouse gases. Clearly they will now be emitted into the atmosphere without any form of abatement.

Going back to UCG.

Underground Coal Gasification is not the same as fracking, says Prof Younger although he believes that fracking is not as dangerous as some would claim. In his view, fracking in the United States has been carried out by unqualified cowboys, so no wonder there have been spills, escapes and pollution. If underground gasification is carried out by people with mining skills or people skilled in exploiting the oil and gas in the North Sea it can be carried out safely. After all, coal mines stretched miles out underneath the North Sea with never a leak. UGC and geothermal developments need to be done while these skills are still around, before these experts retire. Does he think it will happen? Sadly not. There will be no incentive until the population at large realises that energy and food and medicines and plastics are getting more expensive and demands that engineers find a solution. By then the only alternative will probably be to buy the technology and skills - technology invented in the UK – from the Chinese.

 The problem with unconventional energy, as with all other forms of renewable energy, is that oil is currently so cheap that it is difficult to be cost competitive, although on-shore wind is pretty close. For the moment. 

A Ray of Sunshine (lots, actually)

Meanwhile, the BBC, Daily Mail and many others report on the new solar plant about to open in Morocco. When it is complete it will provide enough power for a million people, 20 hours a day. Yes, even at night. The difference is that this is not a solar PV array. There are no panels which produce electricity when the sun shines on them. Instead there are banks of computer-controlled mirrors which track the sun and focus its rays on a heat exchanger. This transfers heat to molten salt, which in turn is hot enough to produce steam to drive a conventional steam-turbine generating set. The salt holds its heat well after dark. 

It is part of Morocco's pledge to get 42% of its electricity from renewables by 2020. The UN has praised Morocco for the level of its ambition. The UK on the other hand, a much richer country, is aiming for 30% by the same date. Of course the Moroccans don’t have George Osborne.

The Guardian explains how the whole of Europe could run on renewables, given the right distribution infrastructure. We could share geothermal power from Iceland, hydropower from Sweden, wind power from the UK and solar power from Spain. Where there’s a will there’s a way! No will, not enough vision, at the moment, unfortunately.

More Oil

If you were listening to the sustainable futures show in January you may remember that I asked you to predict the price of oil in January 2016. The oil price fell dramatically from over $100 a barrel in mid 2014 to only $47 by the start of this year. My prediction for January 2016 was $65. Today, 25th November, it’s $42, which doesn’t look good for me, or for renewables. OPEC warned this week that the price could spike. They said that they were not prepared to limit production raise prices unless other producers did the same. Their object was to maintain their market share. However the Saudi Oil minister warned that reduced investment as a result of the low price could lead to a supply shortfall which could drive up prices very quickly. According to the International Energy Agency the world currently holds stocks of oil equivalent to nearly 300 days’ net imports. This will be a buffer, but how effective it is depends on how quickly the industry can bring new supplies on stream, or - and this is surely preferable - how quickly we can we can find substitutes.

COP21

I’ve not mentioned COP21. It starts next week. Ban Ki Moon says that in the nine years that he has been Secretary-General of the United Nations he has seen first hand the consequences of climate change. He has seen the effects on the developing world and the likely effects on his grandchildren and future generations. 

“As the head of the United Nations,” he says, “I have prioritised climate change because no country can meet this challenge alone. Climate change carries no passport; emissions released anywhere contribute to the problem everywhere. Economic stability and the security of nations are under threat. Only through the UN can we respond collectively to this global issue.”

Mass demonstrations urging world leaders to come up with binding and effective solutions have been planned for months. Unsurprisingly, the French authorities have said that they cannot guarantee the safety of marchers after this month’s attacks. Indoor meetings can go ahead, but the march in Paris planned for this Sunday 29th November cannot. There will be marches in other capitals and major cities all round the world. A march is planned in Paris on 12 December to mark the end of the conference. We'll have to see whether that goes ahead or not. Apart from the marches, the world is on the threshold of something very big.

This is Anthony Day and that was another episode of the sustainable futures show. Thanks for listening. There is so much going on that again I have had to hold things over. Next time of course we will be in the middle of COP 21 the Paris climate conference and I shall certainly be monitoring that as it unfolds. That will dominate future episodes. It's all about sustainability. It’s about climate change, and energy and food and population and as you have seen in this episode, it’s about water and other scarce resources as well. The world is changing and change is affecting business as never before. It means you need to plan. You need to plan more than ever. If you're not sure how these things will affect your business, if you'd like to have a general chat on what's happening and how it may change your world, your market, your supply chain, give me a call. I’m Anthony Day and my number is 07803 616877 in the UK. Give me a call and let's talk. In any case I hope you'll be listening to next week’s Sustainable Futures Report.

 I'm Anthony Day and that's it for another week.

Do you need to worry about ESOS?

Probably not.

You may not qualify and even if you do the reporting deadline is not until 5 December 2015.  

ESOS is the energy savings opportunity scheme. It implements art. 8 of the EU Energy efficiency directive.  It's a regulation but the Department of Energy and Climate Change (DECC) say that they will operate it with a light touch. Certainly it's very different from CRC. It's not a tax and although there could be penalties they will only apply in exceptional cases.The objective is to save energy, to make organisations more efficient and therefore more competitive, although in the face of collapsing oil prices and falling coal and gas prices the urgency of this may not be immediately apparent. Of course, to a large extent reducing energy usage reduces the nation's carbon footprint which is high on the priority list for DECC.

So is your organisation covered by ESOS?

If your organisation is in the public sector then it is excluded. If you operate in the private sector you are covered by ESOS if you employ more than 250 staff or you have a balance sheet total of more than £34 million or an annual turnover of more than £40 million. The reference date for this is 31st December 2014. ESOS applies to all UK operations which meet the criteria even if the ultimate owner is overseas. It also applies to non-profit organisations which fulfil the other criteria.

Assuming that you are covered by ESOS,  the first requirement is for you to identify the energy that you use in your buildings, your industrial processes and in transport. You must calculate the total use over a 12 month period and present an audit trail to justify your figures. If appropriate, you can use data from other schemes like the CRC or the EU emissions trading system to back up your results.You then have to audit at least 90% of the energy used by your organisation in accordance with the ESOS criteria.Your audit plan must be approved by your lead assessor. This may be an employee or an external consultant. Either way, the lead assessor must be qualified and appear on the Approved Register held by iema (Institute of Environmental Management and Assessment) or by a number of other Approved Organisations. A full list of Approved Registers is on the GOV.UK website.

 Once your audit is complete the report must be signed off by your lead assessor and by a director of the company. It must then be submitted to the environment agency not later than 5 December 2015. The environment agency is the scheme administrator. The next stage is to act on the ESOS audit recommendations.The whole objective of the process is the help organisations find ways of being more efficient and making better use of energy, so this step is arguably the most important. 

The Environment Agency will review a sample of audit reports and may possibly wish to review yours. Apart from that, your only obligation is to produce your next audit report in four years’ time: 2019.

At the time of writing, 15th January 2015, the oil price is around $47/barrel. That means it’s more than halved since the summer. Some say it’s down for the long term and I talk about that in "Energy - the story of 2015". For the moment, ESOS is designed to help save energy and that must sharpen your competitive edge, whatever the energy price. And designing and implementing energy saving strategies now is protecting your organisation against the day the price spikes back up again.

Want to know more? Go to www.gov.uk and search for ESOS, or drop me an email: mail@anthony-day.com 

Cutting Fuel Costs

Petrol duty rises today by 1p/litre.

Have you had that email forwarded and re-forwarded from a friend of a friend of a friend? The one that urges you to boycott Esso and BP when buying petrol, to force the wicked oil companies to bring prices down to £0.90/litre?

I class it as a "quasi-virus". It urges you to send it to all your contacts and if everyone does that it truly means millions of messages. Why a virus? Because it's just setting out to clog up and slow down the internet with all these messages.

What about the boycott of Esso and BP?

First, it's not true when they claim that the oil price is "as low as it has been for a while." It hit $147/barrel in July 2008 and then fell back, but it's been climbing since the beginning of last year and today is at $83. In sterling that's £73 in July 08 and £55 now - the gap is closing because sterling has fallen against the dollar. The long term average for oil is around $30, but as it runs out and we have to get it from increasingly remote and unstable regions the cost of production goes up and up. Industry experts predict the $200 barrel within 5 years!

So what happens if we stop buying from Esso and BP? The truth is that Morrisons, Sainsbury's, Tesco and all the rest don't own oil wells or refineries. They buy petrol from the oil companies - like BP and Esso. Even if we managed a 100% boycott there would be no change to the price - though there might be queues at the supermarket forecourts! As with electricity and gas, we cannot do anything to drive down the price of what is becoming a scarce resource in the face of growing world demand and population increase. The only solution is to get the very maximum out of every gallon: drive carefully, drive only when you have to, choose an economical car. Very boring, but I'm afraid it's the truth.

Fuel Prices and Your Business

It’s always tempting to say I told you so, but those of you who have attended one of my workshops or seminars will know that I have been predicting energy shortages and fuel price increases and I always said that they would hit us much sooner than climate change.

Will climate change your business? Yes that’s still an issue, but what about the current fuel situation? We have hauliers protesting and threatening a blockade if the government doesn’t cut tax within a week, we have politicians saying that the government should shelve the increase in car tax and the proposed 2p increase on fuel duty. Apparently the Prime Minister and the Chancellor are meeting the oil industry today to find out whether they can pump more oil out of the North Sea.
So what’s the background to all this? Simply, supply and demand. Rapid economic expansion in China and India are driving the demand for oil and the supply of oil is finite. There is only a certain amount of oil in the ground and at the moment there are some problems with refinery capacity as well, which is restricting supply. Last week the International Energy Agency revised its forecasts for future oil production downwards leading to some of the speculation which has also driven up the price. So oil has gone up, and this has driven up the price of petrol and diesel, but it’s the government which is getting the pressure. It’s all too easy to blame the government and at the moment people are busy blaming it for everything. But it’s not just this government; it’s the previous government and every government we’ve had for the last half century. This is not an oil shock; this is not a surprise. Shortages and price increases have been predicted for about 50 years. Anyway, we are where we are so what do we do about it?

As you will have noticed, prices accelerated over a relatively short period of weeks. Any solutions like finding more reserves, just supposing there are any, will take years if not decades to bring on-stream. Even though the government may bow to pressure in the short term, we have a problem. In the long term we face continually rising energy costs and we may well see the pace of that increase rising rapidly.
In today’s Guardian, Gordon Brown talks about free insulation for people on low incomes, smart metering, carbon capture and storage generating stations and more nuclear power. None of this will solve the price or supply of petrol and diesel. Oil prices are going up and gas and electricity will not be far behind. This will affect you individually and it will affect your business.

Governments can be criticized because they have assumed that oil and energy will continue to be widely and cheaply available, in spite of the evidence which has been around for at least 50 years. It does not make sense to build more roads and more airports if there is going to be an energy shortage. It does not make sense to close post offices and to centralize schools and hospitals and other public services if there’s going to be an energy shortage. It does not make sense to encourage out of town shopping and the growth of supermarkets if there is going to be an energy shortage. Supermarkets are fine for the operators because they rely on the consumers to handle the last part of the distribution. The last part of the supply chain –from store to home – is arguably the most expensive and has the biggest carbon footprint. But it’s the consumer that pays for this.

Let’s also remember that oil and gas are not just fuels. They are raw materials for plastics, pharmaceuticals, fertilizers and many other products. We have not yet seen the full effect of the oil price on product prices, due not only to increased distribution costs but increased costs of manufacture. So everyone is going to see increased costs of living.

Your business will be affected because it will cost you more to run your vehicles, it will cost you more for lighting and heating and it will cost you more for energy used in the production processes. Most of us, though, are in a global supply chain so we need to understand the effects all this will have on our customers and the effect this will have on our suppliers. Even if the government cuts road tax and fuel duty there is a point beyond which it cannot go, and in any case it will have to replace lost revenues through other taxes. As the oil price continues to rise, the cost of fuel, the cost of travel, will rise. As an individual you will become increasingly aware of the costs of driving to the supermarket, of taking the kids to school, and taking trips at the weekend. You and your staff will become increasingly aware of the costs of commuting to work and for some people that will be a deciding factor on who they work for. We need to look at how people can work from home and we need the government to ensure that the bandwidth is available so that people can work from home. Of course we have to recognize that many jobs cannot be carried out from home so we have to plan to be able to get the right staff in the right places.
We live in a global economy and very many organizations now either have their own factories in China and the Far East or buy from suppliers in those countries. The decisions to rely on those sources of supply were not taken overnight and were frequently many years in the planning. You need to look again at your supply chain and ask how increasing energy costs and material costs will affect it in the future. If you need to change, you need to plan. You may be facing a process which will take years to implement. Unless you start now you could be out of business if things get really bad in a few years time. Now is the time for scenario planning. What if? What if? What if?

I know it’s a cliché but the pace of change is accelerating and only those who plan will survive. Oh, and what about climate change? Climate change is still a business issue in even though the signs are that the government will cave in to pressure over fuel prices and help people to continue to use as much energy and emit as much carbon as before, at least in the short term. Nevertheless, there is still the Climate Change Bill shortly to be passed and there is still a wide range of environmental regulations affecting all businesses. We have still got to make sure that we comply.

Next month I present a workshop entitled Best Practice for Environmental Champions at the Low Carbon Innovation Exchange in London. I shall be covering all these issues, and whatever else has arisen in the meantime.

Maybe see you there, but if you want to talk about scenario planning and how these issues affect your business give me a call on 01904 654986.

I’m Anthony Day and I look forward to hearing from you.