Economic Outlook - ideas taken from a presentation by James Sproule of the IoD

Overview

The Institute of Directors represents senior executives of businesses of all sizes in all sectors throughout the UK. James Sproule was recently appointed Chief Economist and Director of Policy at the Institute. The week he came to Leeds to share his thoughts on the economy with Institute members. Here is what I learnt.

In the UK the tax take is about 35% of GDP. It is a feature of developed economies that proportion remains very stable over time. The figure is lower in the US and much higher in Denmark (48%), but varies by little more than one percentage point up or down over time.

Financial Crisis

The financial crisis was not just down to the banks, although they lent more than they should. Consumers borrowed too much, businesses borrowed too much and governments borrowed too much and let the money supply got out of control. An inflation-led crash can be resolved relatively quickly. A debt-based crash, like the one we have just had, takes longer because the money has to be paid back. UK consumers are already well on the way to paying down debt to 2008 levels. Business has benefited from a weaker pound and has chosen to take greater margins rather than seek greater market share through price cutting. Greater margins have allowed business to pay down debt.

The Budget

The Institute’s members represent a significant proportion of the UK’s GDP and it is able to represent their views at the highest level of government. In advance of the budget, members indicated that they wanted business rate reform, a higher income tax threshold, a higher starting point for the 40p tax rate, pension reform and a review of airline passenger duty. Several of these suggestions were reflected in the budget and pension reforms went much further than expected.

HS2

The Institute has made it clear that it does not consider that HS2 will be a solution to the North/South divide - a view endorsed by “Failure to Transform: High-Speed Rail and the Regeneration Myth,” a report issued this week by the Institute of Economic Affairs. Apparently this view was not popular in Whitehall and the IoD was called to account but protested that as independent organisation it had every right to reflect its members’ views. The government is running regional roadshows to promote its case.

Threats to the Economy

The euro zone continues to have problems. In southern Europe the banks are unable to lend to prime the pump for recovery. This is partly because their safe asset ratio has been raised from 2% to 12%. More importantly, many depositors in the south have transferred their savings to banks in the north. The logic is that if any of the southern countries drop out of the euro then the new local currency is likely to devalue by as much as 30% or even 50%. Savings tucked away in euro in the north are safe, but not available to fund investment in the south.

Inflation is a likely future threat to the UK economy. Although there has been a rise in the money supply, inflation remains low because the velocity of circulation remains low. Governments always promise to keep inflation under control, but historically governments have always used inflation to reduce government debt, so who’s to say this government won’t be tempted?

Wealth Distribution

The Gini coefficient is a measure of wealth distribution where 1 means that all the wealth of a nation is in the hands of one person and 0 means that it is equally shared. Currently Saudi Arabia is rated at 0.6 and Russia at 0.2. In 1979 the UK was rated at 0.24, in 1980 at 3.4 and is currently at 0.4, slightly above the rest of Europe. In 1979 the average salary was £4,000 and the majority of earnings levels were clustered in a very small range. The reasons for this were lack of incentive with an 83% top tax rate, an industrial structure with very large employers and trades-union-led national pay bargaining. By 2013 average earnings were £25,000 and the range was very much wider. There was merit-based pay, no national pay bargaining and a more diffuse economy with small businesses and start-ups. It would be impossible to narrow earnings differentials by moving back to the 1979 situation.

One percent of the UK population are super-rich. This group is not affected by the same drivers that influence the rest of the economy; their position is the result of globalisation and opportunities where winner takes all. It would be possible to drive out the super-rich through taxation, but it is not clear whether that would be desirable. Taxation would put their wealth into the public purse and boost GDP in the short term. At the same time it would remove these funds from investments in the long term. Is the government the best spender of money? Should the US tax Bill Gates to the extent that he can no longer afford to fund the eradication of malaria in Africa?

Challenges for the Next Government

There is still work to be done on the deficit. Cuts will continue and their full effect has yet to be felt. Only a government with a substantial majority will be able to keep its nerve on this. Growth is good at the moment, trending at 2.5%. However, we are approaching a demographic inflection where the working population is shrinking. Unless we can improve productivity this could pull growth below 1%, which will feel like recession to many people.

Questions from the floor

What would be the effect if the living wage became the minimum wage? Wage rises have outpaced productivity. If wages rise even further it will make businesses less competitive. The benefit system overcomes this to an extent, but there is no doubt that the tax credit and benefits systems need reform.

Can we look forward to a stable GBP/USD exchange rate? Nobody can predict exchange rates. Continuing uncertainty in the euro zone may reduce the value of the euro against the dollar. The influence of the euro zone might cause the pound to weaken.

If HS2 is not the answer, what, if anything will correct the north/south divide? Logically, as overheads and wage rates rise it makes sense for organisations to move their back offices out into regional centres. The pressures are there, but for the moment they seem to be resisted. Within 20 years it is likely that more wealth will flow from the south-east to other parts of the country, but there will never be equality. In an aside, there is every possibility of a housing crash if interest rates rise. Traditionally borrowers mortgaged for three times annual income but in this time of unusually low interest rates they are borrowing four times or more. If interest rates go back to more normal levels many borrowers will be over-stretched, and not just in the south-east.

What is the circular economy?

BSI, the UK standards organisation, hosted a stakeholder day on Waste Prevention and the Circular Economy this week. I joined a round table discussion on "What is the circular economy?"

The definition we came up with was:

“Sustaining economic viability without compromising resources, including land, water and living space, or compromising the environment.”

There was a wide range of opinions and ideas. Some saw little difference between our definition and sustainable development. The implicit “fair shares for all and fair access to materials” is very similar to the original definition of sustainability in the 1987 Bruntland report. 

We turned our attention to how we would achieve the circular economy. Legislation will define what is needed whilst standards will show how it can be done. We need something like a Kyoto agreement for the circular economy, hopefully more successful than the original Kyoto agreement. EU regulations for eco-design, material circularity and so on can contribute to the establishment of the circular economy, but we need global action both by governments and companies. 

Marks and Spencer was cited as an example. They demand that their Turkish suppliers measure their carbon footprints  - something they would never consider doing without pressure from M&S as a major customer. 

Legislation and taxation imply penalties but it is far more important to have incentives at all levels. We need clear strategies, tools, research and education, including education for both designers and consumers. Clear communication and explanation of the ideas can generate more consumer and employee loyalty.

The question was raised whether the circular economy could apply to all sectors and all industries. We thought there should be an overarching concept but that standards should be more local as components of the whole. Some thought that the definition of the circular economy would change as we moved forward and get tighter and tighter. Others pointed out that there are already some 200 environmental standards and surely yet another standard is not needed.

We looked at how different nations will achieve the circular economy at different rates. For example, in some emerging economies the establishment of landfill sites is an advance, so there is an awful long way to go towards achieving zero to landfill. On the other hand developing nations are used to scarcity of resources and in many cases are far better at making good use of resources as a result.

You could say that the circular economy is work in progress.

Re-Thinking Progress - The Circular Economy

Bradford University, March 2014. A conference presented by the Ellen MacArthur Foundation

A personal overview by Anthony Day

This post is also available as a podcast at www.susbiz.biz

I came to Re-thinking Progress with my sustainability hat on. I’d read Cradle to Cradle by Braungart and McDonough a while ago and I thought it was a great idea but something for the long-term future. I left the conference knowing that ‘sustainability’ is a dirty word to many people there, and with a realisation that the circular economy is very much here and now. Throughout, we were directed to websites and books. There’s a list of links at the end of this article.

What was reinforced throughout the conference is that we currently live in a linear economy. This means that we take, make and discard. We use natural resources in our production process, create products from them and throw them away when we’ve finished. We then use more natural resources to make more products, so natural capital is depleted and the rubbish heaps get bigger and bigger. Clearly this can’t go on, so in a circular economy waste = food. Everything is re-used indefinitely, just like nature.

The sessions which I attended over the three days reinforced this basic message. Here’s what I learnt.

Alysia Garmulewicz presented “3-D printing and the circular economy”

3-D printing or additive manufacturing is a whole new system, not just a new technology. 3-D objects can be printed cheaply in the home or high precision components can be produced on site on demand. Objects can be created in plastics, metals or even food. Supply chains are radically shortened - no factory, no distribution, no inventory. There are social implications as well. The Ethical Filament Foundation helps litter-pickers from developing nations to create an income by creating feedstocks from waste. Production can be localised, and as each object can be customised the consumer becomes closely involved with the process.

Ken Webster facilitated a session on “So you think you know about the circular economy?” He told us that any economy is composed of just energy, materials and information. We worked in teams to see how the various components and policies fitted together in different ways to make either a linear or a circular economy. He introduced concepts like the Chicago Plan - all lending must be backed by deposits; the biological cascade - using materials for different purposes as they degrade throughout their life; the use of complementary currencies. His example for this was rewarding people for picking up litter (more litter!) with free bus tickets. They got free travel using spare capacity on the buses and the litter got picked up. [Many years ago I had an idea for a recycling reception centre. People would bring in newspapers, bottles, tinfoil and so on and I’d give them trading stamps in return. It never happened and who remembers Green Shield stamps now?] We need to tax things we don’t want to happen, like resource use, rather than taxing things we do want to happen, like employment.

Flora Poppelaars spoke on “Designing products for a circular economy”. Her presentation was based on her internship with Vodaphone when she examined the possibility of a re-usable mobile phone. The circular economy implies services rather than consumption. In other words a mobile phone user does not own the phone, they pay a monthly subscription for a phone service and if anything goes wrong with the handset it goes back to the manufacturer and a replacement is provided. To make this business model viable the manufacturer must be able to disassemble the handset and repair or remanufacture it. We saw how designing for disassembly is important and how it permits customisation as well as re-use. Motorola’s Project ARA and Phone Blocks (links below) both show how the consumer can choose a better camera, a louder speaker or a dual SIM configuration, or anything else to meet their needs. Flora also told us about Ask Nature, the website which shows how nature addresses problems from aeronautics to architecture and sounds to swimming and how we might adopt these techniques. 

The first day closed with a presentation by Ellen MacArthur by telepresence from HQ in the Isle of Wight. The Ellen MacArthur Foundation was established in 2010, backed initially by National Grid, Renault, BT, Cisco, and Kingfisher, and now by Unilever, Phillips and McKinsey as well. It is accepted at the World Economic Forum, linked with universities across the world, holds an annual summit and is planning a Disruptive Innovation Festival for October of this year.

Ellen explained how efficiency is fundamentally important, but it is a transitional strategy. Efficiency cannot be increased indefinitely. As somebody said, the laws of physics are non-negotiable. She gave us another example of the service economy, where Phillips is contracted to provide lumens, not lighting equipment. Phillips provides the lights and the electricity and the client pays for a guaranteed level of illumination. She reminded us that food waste going to landfill in a traditional linear economy represents a loss of embedded, heat, energy and fertiliser. In a circular economy this all goes back into the production process.

It was an inspiring presentation, difficult to replicate on the page. I certainly left looking forward to the next day.

I started Day 2 with the Short Talk module. James Walker, head of closed-loop innovation at Kingfisher presented “The Role of the Consumer in the Circular Economy”. He made the point that as a retailer he didn’t want consumers to stop consuming or he’d be out of business. For me, he made the most important point of the whole three days. To paraphrase: You won’t motivate consumers - or business - to change behaviour by frightening them or preaching the circular economy agenda. You need to motivate them by offering them value, not problems. For example, if we want stop people throwing old electrical items into landfill we can offer discounts or gift vouchers on part exchange. The message is key and needs to appeal to the customer. It probably won’t mention green, sustainability or the circular economy, but must be designed to stimulate the behaviour that meets those objectives. Make the consumer feel good, because problems don’t solve problems.

The second short talk was from Ken Webster on “Systems thinking, education and a circular economy.” Ken reminded us of the traditional “take - make - dispose economy” and contrasted it with the butterfly diagram of the circular economy. You can find the diagram here: http://www.ellenmacarthurfoundation.org/circular-economy/circular-economy/interactive-system-diagram The two wings of the butterfly represent the biological cycle and the technical cycle - each a closed loop as far as possible. The technical side mimics the biological side. On the technical side products are maintained to extend their lives. When this is no longer possible they are re-used or redistributed. When they no longer work at all they can be remanufactured, and when they are finally worn out the materials and components can be recycled into new. Waste and disposal in landfill is minimised. The technical cycle has recycling as part of the process, but as the last resort. Recycling in our current linear economy is frequently the first choice after disposal. It is usually incomplete, sending some parts straight to landfill, it is usually down-cycling - producing an inferior product - which itself goes to landfill in due course.

Ken told us about ordered complexity (need to look that up) and how this should be the focus of education because this is the real world. He told us that in a wired world teachers are no longer the sole source of learning. If people really want to find things out they can ignore formal education and do it anyway. “You don’t need permission for a revolution.” Things are changing.

What’s the connection between re-offending prisoners, 80,000 tons of frozen shrimp and a double-decker bus? Why, the circular economy of course! Graham Wiles from Flo-Gro Systems presented “Aquaponics and Biofloc - a circular economy solution to food security.” Apparently we eat 80,000 tons of frozen shrimp in the UK each year and these are harvested by bottom trawling, an unsustainable technique which devastates the seabed. Graham’s solution is aquaculture - growing the shrimps in tanks. But there’s more. Growing shrimps produces waste and Graham has used the waste to grow plants. Combining hydroponics with aquaculture produces aquaponics - a circular system. There’s still more! Graham has involved offenders, excluded pupils and mental patients in the construction of his aquaponic units. It’s given them motivation, self confidence and skills to move on to other jobs. Win-win-win. And the double-decker bus? Apparently he once had to install a fish farm in a bus to avoid planning restrictions.

“Circular Economy - why it makes business sense.” Ella Jamsin told us how the rapid rise of developing countries, ten times faster than the original industrial revolution, is putting pressure on resource prices and exaggerating price volatility. She reminded us that the biological cycle recycles and re-absorbs almost everything while the industrialised technical cycle ultimately sends almost everything to landfill. Successful re-use, re-manufacture and recycling depends on the initial design. Ella quoted figures showing products not designed for re-use had lower or negative values than those that had been adapted at the design stage. How do we bring products back into the supply chain rather than into the waste stream? By offering discounts for trade-in. By not selling products, but by renting their use. Car clubs are an example. The rental model makes higher quality products more easily available because consumers do not have to find a high initial purchase cost.

Education is geared to the linear economy. It is now time to change and adapt. It is now time to convince policy makers that the linear economy model is broken. The potential savings from adopting the circular economy are considerable. It has been calculated that the annual material savings on medium-life goods in the EU could be $630bn. The annual material savings on consumer goods could be $700bn. There would be energy savings as well.

“Higher Education to enable a circular economy” was a popular session facilitated by Prof. Peter Hopkinson and Stephanie Hubold. I’m not an academic, so I really went along to watch. Separated into groups, we looked at how higher education should be developed to incorporate the circular economy. My group looked at business education. We’re gong to launch the CMBA; the Circular MBA. I look forward to signing up for the one-year course!

Time for a game! Katie Whalen has developed a board game which could be the Monopoly of the 21st century. Appropriately it’s played on a circular board and it focusses on materials which are critically scarce. Each player is assigned a product which needs up to three of these resources. The object of the game is to obtain the materials and manufacture the products. The first to produce three items wins. Like Monopoly, there are wild cards. These are strategies, such as re-manufacture or redesign to save material, and players can choose whether or not to buy these. Then there are world events announced every so often by the game facilitator. Events such as massive price increases, or export bans by China - the major producer of most of these materials. Current events could be fed into the game. We had the opportunity to play with the only two sets of playing pieces that exist. I really hope this game can be commercialised. It’s a valuable teaching tool for students and for business people.

Yes, it’s still Day 2, and the final session I attended was “Teaching circular economy in a global context” by Rob de Vrind. Rob hit us with masses of pictures and masses of ideas. He took us from internet 0.0 to internet 5.0 and beyond. Here are some of the ideas he shared. Multinationals should be contained. We need to move from ego-centrism to eco-centrism. (Nice idea. Will turkeys vote for Christmas?) Tax materials, not labour. Read Jef Staes: Do diplomas kill passion and talent? Look at the Phone blocks video on YouTube. Check out the free resources at the Khan Academy. 

The internet is now responding to customised requests like liftshare and car sharing. Is social lending the end for banks? Crowd-funding? Why buy when you can borrow - especially things which you use infrequently or only for a short time? Ebay and Freecycle are part of the intelligent circular economy. Sustainability is making things less bad; it’s not the whole solution. Nature works on renewable energy, why not us? 50% of electricity in Germany comes from renewables, but only 4% in Holland. Some work to do there!

There’s 50 times as much gold in an iPhone than in the gold ores currently mined in South Africa. We use toxic materials; nature does not. Bio-based compostable plastics are available now. (Unfortunately the compostable plastic bottle is a contaminant when mixed with traditional bottles for recycling. It’s still a step in the right direction.)

Trigema makes compostable T-shirts

PUMA makes compostable shoes

DESSO carpets clean the air

Some Dulux paints clean the air

Companies like Steelcase Solutions lease office furniture

Herman Miller office chairs are designed for disassembly. (Although spares are very expensive at present.)

Increasingly, standards require that air and water leaving industrial plants are cleaner than when they went in.

Have a look at the Wuhan Energy Flower - amazing building. 

The book Cradle to Cradle broke new ground. Products can now be cradle-to-cradle certified. Why are we not using (more) geothermal energy? We can 3-D print plastic PV panels or even stem cells.

After all those ideas I just wanted to go home!

Day 3 - 09.00 in Bradford and 16.00 in Hong Kong. Paul Clarke addressed us across the ether on “Pop-Up Farm: engaging schools, communities, and business in the transformation of the urban mind.” Paul started by setting the scene. The fact that 99% of all food for Hong Kong is imported. That the utility of all our institutions is under strain. That we have only a 20-25 year window to change from industrial to ecological lifestyles. That Beijing is nearly paralysed by smog while China commissions seven new coal-fired power stations every month. Business as usual is leading us on track not for 2°C increase by the end of the century but 6°C. If we carry on like this, 30% of all mammals will be extinct by 2030. We are facing “The Great Die-Out”, the most significant extinction since the age of the dinosaurs. Only 3% of the world’s water is potable. Food and agriculture depend on fossil fuel. Soils are being compacted and nature is being stifled. Much top soil is now being washed irretrievably away. This can only lead to food insecurity and social unrest.

And now the good news. Coffee Club is taking the message, the promise of a different future, into schools. Quality coffee is supplied to schools and sold on at a profit to parents with profits used to establish eco projects.  Students analyse the supply chain. The links right back to the farm can be accessed via a QR code on every packet.

The Hitchhiker’s Guide to the Earth is an online game from the Pop-Up Foundation. It starts with a doomsday scenario. Will that motivate students or just depress them? Either way, Paul firmly believes that education must change. “Education is in the Dark Ages. It’s training for a world that no longer exists.”

“Bootcamp on the Circular Economy.” Yes, it’s Ken Webster again! He started off with an illustration of key trends - population, energy and all the rest, all trending towards infinity and demonstrating the impossibility of business as usual.  This session re-presented a number of recurring themes and reinforced them by putting a different spin on them. Recycling  legitimises the linear economy. It’s only a half-way house, postponing the trip to the tip for resources. Renting or leasing is already the business model for many major industrial goods such as truck tyres or aero engines. Ebay is almost a rental system - buy it, use it, put it back on ebay. Don’t recycle, up-cycle. (Ken couldn’t immediately think of an example of this, but I’m sure there is one.) At the very least, keep things in the production loop and minimise waste of every kind. A problem with recycling is that if it's super successful it suppresses demand. Our economy and our banking system both depend on growth. Infinite growth is impossible in a linear economy. The circular economy is the only answer. We can have continuing growth as long as we can re-use, remanufacture and recycle our resources.

The final session I attended was the “Circular Economy in the Classroom” drop-in session. A very professional presentation by teachers from Skipton Girls’ High School and Archbishop Holgate’s School in York showed just how much can be done to teach the circular economy and how enthusiastic the pupils are. Like the whole of the conference, it demonstrated that while the future reality could be doom and gloom, there is so much enthusiasm and so many ideas out there.

Now to convince business and the policy-makers!

This has been a brief overview of what I gained from the Re-thinking Progress conference. Thanks to the Ellen MacArthur Foundation for the invitation, and for making it all possible.

Here are links and books referred to by the various speakers:

The Ellen MacArthur Foundation ellenmacarthurfoundation.org 

3-D Printing

http://www.fabfoundation.org/about-us/

http://emps.exeter.ac.uk/engineering/research/calm/

http://www.nottingham.ac.uk/research/groups/3dprg/index.aspx

http://www.stratasys.com

http://www.ethicalfilament.org

http://www.3dhubs.com

So you think you know about the circular economy?

Re-inventing Fire - Amory Lovins

The Second Machine Age -Erik Brynjolfsson, Andrew McAfee

Designing Products for a Circular Economy

Cradle to Cradle - Braungart and McDonough

http://www.c2ccertified.org

http://www.asknature.org

http://www.projectara.com/#project-ara

https://phonebloks.com/en/goals

Ellen MacArthur - Disruptive Innovation Festiva;

http://www.ellenmacarthurfoundation.org/education/featured/disruptive-innovation-festival-2014-20th-october-14-november

Short Talks - these were professionally video-ed and will presumable be available on the EMF website in due course.

Role of the Consumer

Nudge - Richard Thaler

Stark - Ben Elton

Systems Thinking

http://www.ellenmacarthurfoundation.org/circular-economy/circular-economy/interactive-system-diagram 

The Gardens of Democracy - Hanauer and Liu

Cultural Genocide - Lawrence Davidson

http://www.fairphone.com

Circular Economy - why it makes business sense.

http://www.citycarclub.co.uk

Teaching circular economy in a global context

Jef Staes: Do diplomas kill passion and talent? http://youtu.be/G6JGYRodNeA 

https://www.khanacademy.org

https://www.liftshare.com/uk/

http://www.trigema.de/shop/index.jsf

http://www.desso.com

Wuhan Energy Flower : http://www.greenlinked.com/architecture/concepts/82-wuhan-energy-flower-worlds-most-sustainable-officebuilding-wuhan.html

Pop-up Farm

NASA - temperature change http://youtu.be/JRayIgKublg (there are many other videos from NASA on the theme)

Hope in a changing climate http://youtu.be/z_xET5iZSy0

Green gold - http://youtu.be/YBLZmwlPa8A

happycoffeebean.com

hhg2e.com

http://www.pop-up-foundation.org

Circular Economy Bootcamp

Steady State Economics - Herman E Daly (and several other books by him)

http://www.riversimple.com/Default.aspx ultra low emission cars

No surprises!

 No surprises in the Autumn statement after all the leaks. No surprise that Labour criticised the whole thing. Sadly, no surprise that energy policy, which is crucial to the long-term prosperity of the country, is being treated as a short-term political football. Obligations on energy companies have been relaxed so they are now able to save consumers about a pound a week on bills. Once again an increase in fuel duty has been scrapped. Subsidies for onshore wind power have been reduced and at the same time the duty on gas produced from fracking is cut in half.

In the short term, reductions in energy bills and the fuel duty freeze will help with the cost of living, (though Is £1 per week really important when the average energy bill is now some £1200 per year?) It’s suggested that the reduced support for onshore windfarms is designed to head off a threat from UKip, which is totally opposed to them. All these are good political points in advance or the 2015 election. Not sure why George Osborne is so desperately keen to promote fracking, when it’s clearly so unpopular!

Altogether, these measures are symptomatic of a chaotic energy policy. There are three issues that have to be taken into account when planning energy supplies - cost, security and pollution. 

Let’s look first at fracking. Driving high-pressure water down into shale deposits to drive out oil and gas looks like a good idea. It’s been very successful in the US. The Americans have reduced their carbon footprint by using shale gas, which is a much cleaner fuel than coal. They calculate that they are sitting on reserves of shale oil which are greater than all the oil left in Saudi Arabia. Certainly ticks the security box - as it would for the UK. We’re talking about resources firmly within our borders and under our control.

The trouble with fracking is that it doesn’t tick the other two boxes. Gas is still a fossil fuel which produces co2 when burnt. Globally, we cannot afford to burn all our fossil fuels because if we did the co2 would cause runaway global warming and extreme weather events which would damage food production and make some parts of the world uninhabitable. (Of course George Osborne doesn’t believe in this. He’s with the 5% of scientists who believe it won’t happen. The other 95% are sure it will.) Fracking uses vast amounts of water, it causes minor earthquakes and it releases methane, a highly potent greenhouse gas, into the atmosphere. Then there’s the cost. Nobody knows what gas from fracking will cost. Looks as though George expects it to be very expensive. That’s the second time he’s cut the duty! The sad thing is that fracking is no silver bullet. Nobody even yet knows whether it will work outside the US. In the UK the geology is different, the population density is different and the planning laws are different.

Relaxing the obligations on the energy companies means that they can slow down the process of offering free insulation for cold homes. Well-insulated homes mean less energy and lower bills. There are some (a very, very few) high-spec council homes that cost no more than £20 a year to heat. That’s the dilemma of the privatised energy companies. The less we spend, the less profit they make. In the long term more insulation, more efficient heating and lower bills are good for the consumer and good for the balance of payments. (Don’t forget, we import 20% of our gas from the Middle East, much of our coal from Russia, even electricity from France!) So who will win this one? The consumer or the energy companies? Don’t hold your breath.

Has the government really got an energy policy? Some of us have been warning for years that the lights could go out in winter 2014 or 2015, as power stations are retired before new ones are built. The government has announced a new nuclear power station that won’t be ready for 10 years, they’re offering subsidies to fracking but they don’t know if that works - and it will probably also take 10 years to commission. Meanwhile they are preserving demand by cutting back on insulation  and scrapping the fuel duty rise, and limiting supply by cutting wind power subsidies. Is that a credible policy?

Business Reimagined

Last week E3 Bradford held a Summit.

The closing keynote, entitled Business Reimagined, was delivered by Dave Coplin, Chief Envisioning Officer of Microsoft. he’s written a book with the same title, available from Amazon and all good bookshops.

Dave started by telling us he would project forward how people will live work and play in the future. Or perhaps how they could, because while technology is a force for good, all too often the way we use it means that technology has become a prison. We are using it to do the things we used to do, only faster. After 60 years the office has moved from a phone and a mechanical typewriter (I don’t think the IBM Selectric on your slide was around in 1950, Dave), to a phone and a keyboard today. We work with standardised processes which are designed to be efficient but overlook the fact that they dehumanise the workforce and demotivate. Why do we still commute hundreds of miles from home to office each week only to sit in front of a keyboard and screen like the one we have at home? Only the one at home is now often better! Why don’t we have local work centres where we can go and hotdesk with people in the same situation but who work for other organisations? We could spend our money locally and bounce ideas off people who have a completely different perspective from our colleagues back at headquarters. (I had that idea 30 years ago, Dave. Do you think it will ever work?)

Dave explained how open plan offices kill creativity, how we misuse email, how we’re wedded to the QWERTY keyboard (and AZERTY, QWERTZU and many others across the world) designed specifically to be inefficient, how we all have to work harder to overcome these obstacles of our own making.

So what’s the answer? Social business. Flexible working. Light-touch management with long-term objectives and bonus or oblivion depending on your performance. Nice work if you can get it, and certainly a great approach for knowledge-based roles. For me, I think the utilities, production, construction, the health service and a fair number of other organisations will always need careful planning, skilled management and comprehensive procedures. (I don’t want a debate when that nuclear reactor goes critical.)

I agree with Dave when he says that we should liberalise communication. Of course some things are commercially confidential, but as much communication as possible can speed decisions, enhance corporate knowhow and improve the work environment. (At the risk of being political, I believe that Edward Snowden’s revelations were good for democracy.) We already communicate more quickly as consumers. Have you tried tweeting a complaint about your energy supplier/phone company/car/insurance company/ISP? Quicker and cheaper than hanging on to an 0845 number!

Dave’s message is that we must reimagine our world. We must see the big picture and recognise that “We’ve always done it like this” is not a good reason to keep doing it. We must look for outcomes not processes and we’ll always need leaders, not managers. We need to educate so people have skills, not just a knowledge of tools. We need people with critical thinking. We need to teach people to use technology to the full and to use it responsibly. It’s people who do bad things on line, it’s not the fault of the computer.

Dave’s presentation was delivered with anecdotes, examples and humour. I’ve not repeated them here because I don’t want to spoil it if you get the opportunity to hear him live (or on YouTube, I believe.)

Many thanks, Dave. I’m off to read the book now. I hope it’s as good!

Let's beat up the energy companies!

Yes, let's beat up the energy companies! Let's ignore that we're not just buying energy, but paying for the infrastructure that generates it and delivers it to our homes. Let's ignore the infrastructure, just like successive governments have done, to the extent that it now needs urgent investment and could fail in a harsh winter. Let's ignore that profits pay for this investment (and also pay a lot of people's pensions.) Let's beat up the energy companies and ignore the fact that in unequal Britain those in fuel poverty are also struggling with the cost of food, petrol and the rest. Who shall we beat up next? The supermarkets? The oil companies? Surely not the government!

Published in The i Newspaper 30/10/2013

Computing for the Future of the Planet.

On 25th June 2103 I attended this presentation by Andy Hopper, President of the Institute of Engineering and Technology (IET) and director of the Cambridge University Computer Laboratory, as part of the York Festival of Ideas. This is what I learnt.

It’s about the crossover between computing and sustainability. It’s not the answer to sustainability but it is a contribution to the answer to sustainability. 

Green Computing 

Green computing is about establishing an optimal digital infrastructure. For example, 3-4% of the world’s total energy is used by computers and communications. How much of this energy consumption can be offset? Prof Hopper described how technology can be used to move the processing load around the world to where surplus energy is available. Renewable energy is notorious for intermittence. Sometimes power is generated but there is no use for it so it is wasted. If data centres are located close to sources of renewable energy these surpluses can be used. Global networks permit processing to be carried out wherever this “free” energy is available. Google, which alone has some 1.5 million servers, is already using software to carry this out automatically.

Data centres can be designed for economy and efficiency and computer architecture can be built so that instead of having two extreme states – standby and full power – there can be a proportionate increase or decrease in computer usage as processing demand fluctuates. Increasing hardware performance and more interconnected devices will improve energy efficiency. Workload trends will also affect energy consumption - increases in batch processing and increasing amounts of data produced and consumed. Recognising that not all processing is needed on demand but that some can be scheduled to smooth peaks and troughs will also improve efficiency.

All these measures could lead to future energy savings of 15-20%.

Computing for Green

Having established the most green and efficient computing infrastructure, how do we use this to green the rest of society? Professor Hopper talked of a “Google of Everything” - a universal data resource available to all and with information about everyone and everything. For example, Google Street View could be adapted to give an infra-red view and to immediately reveal where houses are losing heat. This is a first step to saving energy on heating. He told us about Ubisense, a system for tracking objects in three dimensions with an accuracy of  15cm. This is used by BMW not only to track assembly equipment, but also to programme it according to its next task. As the unit approaches a nut it is programmed with the number of turns it should give and the required torque. As it moves to the next nut the system automatically re-programmes it. The result is increased efficiency - more accuracy, less manual intervention, time saved. Accurate tracking already saves money and improves efficiency for Airbus, in public transport depots, dairy farms, distribution centres and convalescent homes.

The big question is how far we go to track ourselves. It is possible to track an individual’s energy footprint, carbon footprint or water footprint. It is also theoretically possible to track an individual’s location to a very high degree of accuracy. With data as detailed as this we can take action to control the use of energy, carbon or water. This would include managing services within buildings according to their occupation and use, monitored in real time. We can give people feedback and tailored incentives. Other sorts of wearable sensors could monitor an individual’s state of health, so if they felt unwell they could go to the doctor and provide a read-out to help him make a diagnosis. (Or maybe the sensor detects a life-threatening condition and automatically calls the ambulance!) A major obstacle to this is the trust issue. Will people believe that their privacy is respected and trust their governments with their data? Just at the moment, with the GCHQ and PRISM issues, evidence of cover-ups and secrecy in the NHS and the police and a legal system way behind technological reality, many people will refuse to participate.

Another example of the benefits of technology is the electronic shoe. A shoe with strain gauges built in to analyse the gait of the runner accelerating, cruising and slowing down. Valuable information for trainers, but an adaptation could monitor the runner’s weight and send an alarm if it fell out side the normal range. Raspberry Pi, the ultra-cheap computer, gives today’s youth an introduction to computing and makes them aware of the threats to privacy from surveillance and hackers. At the same time, this generation is totally relaxed about posting almost anything on Facebook - the bad and the good for all to see for all time. Smartphones, particularly with location services enabled, potentially compromise privacy. However, it is now possible to use fake data when requested by apps, to get the service without giving away private details. But how long before this “mocking” can be detected?

Will we demand privacy and restrict data which could otherwise improve sustainability - consumption patterns, energy use etc? Trends indicate that we will allow our privacy to be gradually eroded. After all, caller ID was once thought to be the work of the devil and now everyone takes it for granted.

Assured Computing

Computer systems are now crucial to society. They are like a pacemaker for the planet: we cannot afford them to stop. We can use more detailed knowledge of ourselves and the way we use the world to take measures to tackle global warming, traffic management and energy demand. However, the more data we manage, the more challenges arise. What parameters of error can we accept? Is there a clear audit trail to authenticate the data? How can we assure privacy and security? 

For the future, Professor Hopper looked forward to robust, self-correcting energy management and mapping systems on a global scale. He’d like to see a method of absolutely removing an image from the internet. At present, nothing can be revoked. Those party pictures you posted on Facebook are there for ever. He’d like to see an application which analyses the correctness of news. He called it a virtual BBC “More or Less”. [More or Less is a BBC Radio 4 series which picks out statistics in the news and shows how they have been twisted, misquoted or wilfully misunderstood.]

Wealth in Cyberspace

This last section of the presentation was quite difficult to understand. Our speaker mentioned an “Ebay for all”. Does he mean that the internet will provide everything we ever need. That we’ll shop on line, meet up on line and have all our life experiences on line? Will we no longer need to travel? He suggested that the developing world could go straight to this state of data abundance, without going through the stages that the developed world passed through.

Not altogether sure what he meant here. Has he read “The Machine Stops” by E M Forster, I wonder? (Perhaps Ross Noble has read it, although it doesn’t mention moles.)

Sustainable Future for Tourism: How Businesses are Changing

This is an article by Sam Marquit. "I am an entrepreneurial independent contractor and home renovation/remodeling expert in New York. I’ve made it a point to share with my readers a day in the life of sustainable building. Forecasting the possible application and implementation of new green building materials and technologies is just one small part of my effort to reduce everyone’s carbon footprint."

When I started working as an independent contractor, my priority wasn't on green building. Now as a commercial contractor, I've really started to develop a knack for sustainable building and green materials. In today's world, there is so much that can be done for the planet, and yet many businesses are only worried about LEED certification. While this is a necessary part of becoming more eco-friendly, there are a variety of organizations and businesses in the tourism industry that are doing something more.

In the United States, consumers, investors and business owners have a lot of economic power. If you think about the places you choose to visit and the businesses you frequently support, then you can see how businesses have a certain appeal because of what they offer.  GreenAmerica.org works to help businesses that are really moving forward with eco-friendly practices to gain notice while also pointing out those businesses that engage in corporate irresponsibility. In addition, the organization helps to build sustainable communities all over the world.

Being one of the biggest hotel chains, you'd expect that the Marriott hotels have a number of eco-friendly policies. While they do a few things and use recyclable materials, it was their recent purchase of 24 million recyclable and biodegradable key cards that gained my notice. Most key cards are made from plastic. However, The Marriott now only uses corn by-product key cards, effectively saving about 66 tons of plastic waste from going into a landfill.

There are some hotels out there that have taken a serious look at their policies and made changes to become more sustainable and eco-friendly. The Las Vegas Palazzo Hotel and Resort is one of them. This hotel has worked tirelessly to change its policies and facilities, which earned them the award of "TheMost Eco-Friendly Hotel in America." The Palazzo has a solar heat system, waste reuse program and water recycling process in order to save on resources and become more sustainable.

It's so inspiring to see so many businesses making changes and really promoting this culture of conservation. This is especially evident with the new green Las Vegas hotels continuing to be built. It will be essential to continue this trend in order to make a change for the future of our planet.

Find out more at fmarquitv.tumblr.com

Energy Bill - who pays?

The Energy Bill makes its way through Parliament with an important vote later today. Why important? Because there is going to be a revolt. 

Just announced - the government defeated the amendment which means there will be NO decarbonisation target - unless the Lords overrules.

The government does not want to include a carbon target for electricity generation. It wants to defer a decision until after the next election. Why is this a problem - and why the revolt? The carbon target will define how clean and efficient our electricity generation must be. In turn that will define how much of the supply must come from renewables, from nuclear and it will determine how urgently (or not) the industry should be cleaning up coal and gas generation with Carbon Capture and Storage (CCS). In energy policy the government is gaining a reputation for dithering. The Feed-In tariff, revised down well before the promised deadline, is a key example. The market for solar panels collapsed overnight and more than a few installers went out of business. 

Carbon targets are as important as guaranteed prices for energy generators. If they are planning plants which will take years to build and will operate for decades they need to be sure that tariffs and taxes - and carbon targets - can be relied upon. Otherwise they will reject the risks and go and look for business elsewhere.

We are on the threshold of a new phase of generating plant. The chancellor is committed to a new dash for gas, powered by gas extracted by fracking from deep beneath Lancashire. Announcements made yesterday claim there could be 7 years’ supply down there. Could be. Nothing is proven yet. Well, we can still get gas from Norway, the Middle East and in time from Russia. Leaving aside the energy security arguments, (would you prefer to rely on gas and coal from thousands of miles away, or to use wind, solar and tides freely available at home?), if the generators go ahead anyway and build new plant, what happens in 2016 when the targets are finally set?

Either we bring in standards which will make a sensible contribution to reducing the UK’s emissions, (and maybe bankrupt generators who can’t meet the new standards), or we decide that all the controls we need fit nicely with exactly how these new power stations operate. 

We have a declared target to reduce the UK’s carbon emissions by 80% by 2050. 

But that’s still a very long way off, and it won’t be this government’s concern!