Sustainability - the Balanced Scenario

Oh no, not another article on green issues! We’ve got a recession to dig ourselves out of, we’ve got the dreaded cuts just round the corner...

But...

We need to stimulate growth, we need to get our businesses going again...

But...

Yes, we’re very sorry about the polar bears and the Gulf of Mexico is a bit of a mess, but the economy needs energy and we all need jobs...

But...

And anyway the scientists can’t agree, can they? And what about that lot down at the University of East Anglia?

But...

You still here?

It’s not easy being an environmentalist. One of the major problems I find is other environmentalists, whose ideas are often impractical, naive and extreme. Of course if you believe that we are on the threshold of a total global catastrophe and no-one is doing anything about it, it’s tempting to climb up a power station chimney, ram a whaling ship or devastate a field of GM crops. It’s easy to write people like that off as vandals (and some of them are!) and go back to business as usual.

Business is what it’s about. Sustainable business. Staying in business and staying in profit, in spite of what’s happening in the environment at large. Business has always faced threats - from competitors, from technology, from politicians, from the bank! Successful businesses - sustainable businesses - have recognised these threats, made plans, taken action and survived and prospered. They have recognised that business as usual is an illusion, and all too often a primrose path to ruin.

So what’s changed? All the traditional risks are here, with the added excitement of government cuts and a global recession. I could add a whole litany of environmental threats, with the added assertion that it’s all the fault of business as so many activists like to believe. Passing round the blame will not get us anywhere, but nor will ignoring realities and failing to plan. And let’s not forget there’s good news - opportunities - as well as bad.

If we look at the whole field of sustainability, it’s about a whole lot more than just climate change. Yes, climate change is a significant threat. Regardless of whether it’s our fault or not, increased-intensity weather events can devastate markets and cut supply chains. Since most governments believe that it is our fault, businesses are increasingly faced with taxes for emitting CO₂.

From a physical point of view there are increasing constraints. Rare earth metals, key components of wind turbines and electric cars, are becoming rarer. Helium will run out well before the end of the century at the current rate, and that won’t just mean no more party balloons but no more MRI scanners, LCDs or fibre optics! Agriculture is struggling to keep pace with ever-increasing population and natural disasters. Floods in Pakistan this year and wild-fires in Russia have sent up the price of grain. The loss of habitat and bio-diversity means the loss off potential new medicines and new crops. Peak Oil and the increasing reliance on oil from hostile nations and hostile locations threaten the price and security of our energy supply.

All right - that’s the bad news, and I accept that the natural reaction of most people is that it’s very sad and very serious but they don’t have the time or the clout to do anything about it. True. But whatever happens you can take action to protect yourself.

Planning, and in particular scenario planning, is becoming increasingly vital. Let’s just distinguish this from contingency planning.

Contingency planning is being ready to keep the business going in an emergency; so you’ll have a plan for a public transport strike that keeps half your staff from getting to work, for a power cut that could threaten your freezers, for a suspicious parcel in the post room and other things like that. It’s essentially about preserving the current business model.

Scenario planning is taking a point in the future - five, ten, twenty-five years ahead - the period will be governed by your capital investment cycle - and predicting what the world will then be like from a social, economic, competitive and technological point of view. It is usual to produce one or two scenarios, changing the major assumptions each time. The key question is then “In the projected scenario, is my business going to be viable?” For example, in the face of increased health propaganda, will a tobacconist be a viable business in 2020? If the government achieves its 35% CO2 reduction by 2020 should we still be selling petrol cars or electric ones? Remember what happened to the radio valve when transistors were invented? What happened to saddlers and harness-makers when Henry Ford brought out the Model T? And who makes a living out of developing photographs these days?

So sustainability is all about staying in business, as well as saving the planet and doing what we can to preserve a future for our kids. We need to reduce, re-use, recycle - and re-engineer if our businesses are going to survive. But first, forget about the alligators and draining the swamp for a minute. Take a moment to look at some future scenarios and ask yourself whether where you’re heading is where you want to go - or even if you’re likely to get there!

Anthony Day is director of Cyber Associates, the environmental management consultancy He worked on the Management Accounting Guideline on Sustainability published by the international accountancy bodies and joined the DEFRA consultation on the greenhouse gas reporting standard.

He delivers workshops to senior management on scenario planning for sustainability, has made conference speeches throughout UK and Europe and now facilitates regular webinars. http://cyber-associates.com/scenario-planning

More on CRC

944 down, 9 weeks to go - Registration: use an agent - how safe is saved? - online guide - Last call for disaggregation - EAM: Kitemark Energy Reduction Verification scheme; don’t forget gas meters - Help the helpdesk - Is your guidance up to date? - Chris Huhne has seen our energy future, but you can make up your own mind on the DECC website - You too can have an energy monitor like DECC - Next CRC Webinar

944 organisations had registered as full participants for CRC by 27th July. Original estimates were a total of 5,000; some people have calculated as many as 12,000, so on the face of it with only 9 weeks to go the situation looks pretty dire. The reality is somewhat different. Many organisations are gathering their data in stages and have already started the registration process. Beware, however, if you are one of those who has started and saved, that the system only stores incomplete registrations for 30 days and after that they are irrevocably deleted.

If you are still not sure about how to approach registration there are two detailed guidance documents showing showing shots of each screen at each stage of the process. This one is for private sector organisations http://tinyurl.com/2v9eagx and this one is for the public sector: http://tinyurl.com/35r4jg8 . Of course these only show you how to enter the data. If you have issues with getting the data together Cyber Associates can help and can handle registration as your agent.

Of the remaining 15,000 or so organisations that must make an information disclosure but are not full participants, some 3,900 have registered. If your organisation comes into the disclosure category don’t miss the deadline. There are penalties for you, too!

The deadline for disaggregation is 31st July, which in practical terms means tomorrow. If you don’t know about disaggregation, don’t worry. You’re too late. (Special rules apply for the public sector.)

Early Action Metric. The Environment Agency has now approved the Kitemark Energy Reduction Verification scheme to count towards the Early Action Metric. This is based on the new BS EN 16001 Energy Management Standard. You now have a choice of this, CEMARS or the Carbon Trust Standard. Get any of these in place by 31st March 2011 to qualify.

Voluntary AMRs complete the other part of the Early Action Metric. As noted before, it’s the percentage of total annual energy that goes through the meter in 2010/11 that is taken into account, so the sooner you instal the AMRs the greater the benefit. And gas meters also qualify.

There are signs that the CRC Helpdesk, not surprisingly, is coming under increasing pressure. Of course there are extensive guidance documents on the website, but some people have raised concerns that they don’t carry version numbers. From time to time they are updated, so how do you know that you are referring to the latest edition? Document properties should give you the creation and modification dates, though that won’t tell you what’s changed. (I suppose you could open two versions in Word and get it to do a document comparison, but you really shouldn’t have to do that!)

This week Chris Huhne, Energy and Climate Change Secretary, presented his first Annual Energy Statement to Parliament. His objectives are to keep the lights burning and to meet the 80% carbon footprint reduction by 2050. The model which his department has used, balancing supply against demand, is available for anyone to work with at http://2050-calculator-tool.decc.gov.uk/. What is most revealing is the sort of changes we will need to make to achieve these targets - including heating homes to no more than 17°C, reducing our use of gas, installing micro wind generation on 450,000 properties and extensive use of electric and fuel-cell cars and vans. Fascinating! Realistic? You decide.

Incidentally, if you go to the DECC website www.decc.gov.uk you will see that they are displaying the energy consumption and carbon footprint of their HQ building in real time. I wish I could say that it’s an example of the work of our strategic partner, NoWatt, but it’s not. In fact NoWatt does better than that: it can report not just to the nearest building, but to the nearest floor, department, circuit or appliance. It’s a key tool for managing energy efficiency and for feeding back to all groups of staff to show how they are doing and to reinforce their engagement with energy saving.

I’ll be presenting the next CRC webinars for the Low Carbon Best Practice Exchange on 7th and 14th September. You can find full details at www.carbon-innovation.com

This content is available as a podcast at www.susbiz.biz And if you want to talk to me live about any of this, I’m available at on 07803 616877

CRC Update

More than 4,000 organisations still to register - less than 12 weeks to the 30th September cut-off - more time for disaggregation - PFI: who’s responsible? - landlord and tenant - Early Action Metric - monitoring carbon footprint - buying allowances - evidence pack and audit - super-smart metering to save energy and save cost.

The total number of CRC full participants was estimated at 5,000 and according to the Environment Agency only 651 have so far registered. That leaves less than 12 weeks for the remaining 4,349 to complete the process by 30th September. Of course you may already have started, but if you’re waiting to clear up some minor query or you have some doubts about your particular case the Environment Agency urges you to register now and sort out queries and errors later. No doubt there will be increasing pressure on the system as we get closer to the cut-off.

Good news if you were planning for disaggregation. The Environment Agency has extended the initial deadline until 31st July, although all your SGUs still have to be registered on their own account by 30th September.

Some organisations operate facilities provided under PFI and the PFI company has claimed that the organisation which uses the facilities is responsible. The Environment Agency has now made it clear that the “counterparty to the supply contract” principle applies, so if the PFI company is paying the bill then the PFI company is the participant.

CRC remains an issue for landlords. Remember, if you bought more than 6,000MWh of half-hourly electricity in 2008 you are a full participant even if you sold that electricity on to your tenants. When we get to the reporting phase, the landlord is responsible for reporting the total carbon footprint from all energy sources, including energy used by tenants. Can you negotiate an amendment to the lease? The CRC legislation gives you obligations, but no additional rights vis-à-vis the tenant.

If you are a tenant and taking steps to improve your energy efficiency, will the landlord pass on the benefit of lower CRC costs to you? Again, can you re-negotiate the lease?

Your Performance League Table position and your total CRC cost are both affected by the Early Action Metric and it’s not too late to get the benefit. The earlier you put in voluntary AMRs (automatic meter reading) the better, because the benefit is calculated on the proportion of your total energy that flows through them in 2010/11. Don’t forget gas meters. You have until 31st March 2011 to achieve the Carbon Trust Standard. As long as you have it in place by that date you qualify in full. The Environment Agency has just approved CEMARS as an alternative to the Carbon Trust Standard. Other standards are under review.

Quite apart from the Early Action Metric and your league table position, the surest way to reduce your CRC costs is to improve your energy efficiency and cut your energy bills. Have I told you about the super-smart metering that gives you instant feedback and detailed analysis for close cost control? Give me a call on 07803 616877 and I’ll tell you more!

Once registration is complete the next task is to prepare for the annual report and for the purchase of carbon allowances in April 2011. You need to have an evidence pack, and 20% of all participants will be audited. Have you been monitoring your carbon footprint since April? Have you got detailed records and an audit trail?

If you would like to discuss any of these points in more detail please give me a call on my direct line: 07803 616877. Together with strategic partners, Cyber Associates can help and advise on CRC registration, obtaining benefit from the Early Action Metric, monitoring your carbon footprint and establishing an employee engagement programme to maximise your energy efficiency.

I look forward to talking to you!

Best wishes,

Anthony Day

PS NoWatt, our super-smart metering partners, have a window in August due to customer holidays. If you want a rapid assessment and installation we can help you to start saving money on energy in a matter of weeks. Call me on 07803 616877!

CRC - do you need to buy allowances next April?

The CRC Energy Efficiency Scheme which came into effect on 1st April 2010 is a sort of carbon-trading system for larger organisations. I say “sort of” because the government sells carbon allowances in April and gives all the money back in October. Those organisations which do really well in controlling their emissions, and hence find themselves at the top of the league table (more of that later!), will get their money back with a bonus of up to 10%. In order to pay these bonuses those who do less well will be penalised to the same extent. Over 5 years this bonus/penalty will rise to 50%.

Let’s look at the first year. In April 2011 you have to buy allowances to cover your EXPECTED emissions in 2011/12. In October 2011 the cost of those allowances will be returned to you with a bonus or penalty depending on your ACTUAL performance in 2010/11. Your cost is therefore the cost of having your money tied up from April to October, offset or increased by the bonus/penalty. This bonus/penalty, by the way, at 10% of your allowances will be less than 0.7% of your energy bill.

What if you don’t buy any allowances next April? You don’t have to surrender them until July 2012 and there will be another sale of allowances in April 2012. By then you will know exactly how much you need and allowances can be transferred from year to year within each phase. If you adopt this procedure you will defer the cash flow effect (not increase it, because you will not buy anything for the following year either. When you get to the end of Phase 1 you can buy exactly the allowances you need, which is important because if you have any extras they cannot be carried into Phase 2 and so will be worthless.

Of course, if you do this you’ll miss out on a possible bonus in Year 1, but is 0.7% of your bill such a big deal?

Disaggregation could save you money, if you move fast!

Carbon Reduction Commitment

The key issue here is that if part of a group of companies uses enough electricity to make it liable to participate in CRC, the whole group must register and report. Every part of the group must measure and report its carbon foot print and purchase carbon allowances under the scheme. Disaggregation is a concession which means that groups can apply to exclude those parts of the organisation which would not be liable under CRC on their own, but only on certain conditions:

• You must register the whole group by 30th June 2010 if you want to take advantage of this. This gives you the time to re-register the parent company before the 30th September deadline.

• You cannot split up the group so that no element is big enough to be liable. The parent company must register with enough subsidiaries to bring usage up to participant level.

If you don’t disaggregate you must report on the whole group and buy allowances for the whole group for the three years of the first phase before you will get a chance to apply for disaggregation again.

So, to save both time and money you must make a decision on disaggregation as soon as you possibly can. Call us now on 01904 654986

The Low Carbon Innovations Network has invited Anthony Day to present a series of webinars on the Carbon Reduction Commitment. He will also be presenting a conference session - How to Win at the CRC Game - at the Best Practice Exchange at London Olympia in June 2010. More...

CRC - is the league table a red herring?

For most people, the Performance League Table is a red herring.

Depending on how scheme participants manage their carbon footprints, they will be assigned a ranking on the Performance League Table. This will be publicly available, so the theory is that organisations will not wish to be named and shamed for appearing low down in the league. Secondly, there are financial penalties associated with your league table position.

Since the Environment Agency took over much of the information on CRC seems to have become both more complicated and more vague. For example, the fixed price for carbon allowances was originally announced at £12/tonne. This does not appear to be confirmed on the current CRC website. When participants get their money back through recycling payments, the original plan was that they would get a bonus or a penalty depending on their position on the league table. This could be between 5% and 50%. Again, these figures do not appear on the new CRC website.

Cyber Associates has requested clarification of these points from the CRC helpdesk, but in the meantime let’s use the original figures. On that basis a 5% bonus or penalty on your recycling payment is about 0.3% of your bill. That’s why we believe that the League Table is a red herring.

You will gain far more by reducing your energy usage than by trying to improve your league table position.

After all - as will be revealed at the 10th June conference - many participants will be prevented from taking advantage of the early Action Metrics and will have no way to improve their position at all.

This is all part of the obligation under the Climate Change Act to cut CO2 by 34% by 2020 and 80% by 2050. With UK emissions still growing, even standing still will be difficult. The oil price has been on the rise for most of this year, so energy is going to be expensive to buy and if you use it inefficiently the government is making it even more expensive to use!

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 DUTY RISE DEFERRED

No 3p petrol duty increase on 1st April - instead it will be 1p, with the rest phased in after the election. Undoubtedly rising petrol prices will increase inflation, but we cannot soften the blow of rising oil prices through the tax system. Oil is running out - or hadn’t you heard? Yes, we may be able to get it from tar sands, from corn or from beneath distant oceans, but it is still running out and as we attempt to mop up the last resources it will get more and more expensive.

Should we encourage people to use less oil by pushing the price up? In the long term that may work, but in the short term it will make life difficult for many “hard-working families” and most other people as well. Few can afford a £20,000 electric car; fewer still can find anywhere to charge it. Will there really be a significant number of buyers prepared to put up with a range of only 100 miles?

Taxation is always a blunt instrument, and never a substitute for policy. Instead of arguing about petrol we should be debating the whole transport and mobility issue. Instead of reserving £30bn for new high-speed rail links across the country shouldn’t we be looking at the millions of shorter journeys that millions of people make every day? Considering how video links and high-speed broadband can reduce the need for travel? Planning to increase home working? Questioning why our lifestyle and working patterns demand more and more travel?

[Written on a train]

Motivating Staff to be Sustainable

Staff motivation is always an issue and it has been a recurring theme at the Low Carbon Best Practice Exchange events held around the country. Very often the question is “How do you keep people interested once the first enthusiasm has worn off?”

Representatives from all sorts of industries - from bus companies to barristers and hotels to hospitals - have all shared ideas. So, how do you keep the ball rolling once the first few months have passed?

The first point that nearly everyone makes is self-interest. “What’s in it for me?” People are often happy to help an organisation succeed, but after a while, if it’s all about how much money the company is saving and how much better the bottom line looks, they want a share of the savings for themselves. A leading confectionery manager addresses this head on with a bonus scheme. One of the nation’s largest bus companies does much the same. Fuel is a very significant cost for them. An extra 1p/litre on diesel increases their bill, (and reduces their profits) by no less than £1m annually, so they send all their drivers on economical driving courses. The drivers then qualify for a share of all the savings made.

Some people have a personal commitment to sustainability and are less motivated by money than by recognition of their personal achievements. A major telecoms company has Carbon Clubs with a website, news and awards. There is a pledging scheme where staff choose from a list or post their own targets. There is clear top-level endorsement, and 66% of staff say they take pride in the company’s environmental performance. Some organisations go further and encourage their staff to set targets for home as well as work. Incentives like a mountain bike can get people interested and sometimes it is possible to set up competitive rivalry between different departments. Some very generous organisations will advance loans for the purchase of hybrid cars or send employees off on trips to save the rain-forest or help with conservation projects.

Travel-to-work plans, involving car-sharing and cycling, can be popular, but there can be resistance to some green initiatives in this time of cost-cutting. There is often resistance, too, from middle managers who see other things as more important. Training is essential so that these people - many of whom are strongly sceptical of anything green - fully understand the business reasons for adopting environmental best practice. Sometimes a phased approach can help, rather than laying on a whole raft of new initiatives all at once.

In many cases the importance of environmental policy is gauged by the importance of the people who support it. The lead must come from the top. The green agenda must given due prominence in senior management briefings, and not just tacked on at the end. Don’t underestimated the difficulty of getting senior management on board. One organisation tried reimbursing business miles on the basis of the least reward for the least eco-friendly cars. The problem with this was motivating senior management. They were very reluctant to approve a scheme which penalised the sort of prestige car which they thought they ought to be driving!

Industrial psychology makes it clear that people will not respond if things are simply imposed; they must understand and agree before they will buy in. So while top management may be persuaded to buy in, the next essential is effective communication to all levels of the organisation.

I worked with a business machinery supplier where the green policy came from world head quarters. Nevertheless, local sales staff didn’t see it as a priority, so an environmental manager was appointed in each country to help middle managers and to provide a link with the policy-makers at HQ. They also worked with the local community and organised initiatives like farmers’ markets or cycle-to-work schemes. Many companies also use such environmental champions; often they are unpaid volunteers and sometimes their managers begrudge them the time off. In other cases heads of department may send along someone to environmental committees just to make up the numbers, not necessarily a person who is committed to the green agenda. Again this emphasises the need to inform and motivate management at all levels.

Experience shows that encouraging staff to work with the local community on green initiatives is a good motivator - and good PR. Some organisations will formalise environmental responsibilities as part of a staff member’s role and putting people on projects can be valuable learning experience for them. It is important to celebrate their successes. Feedback is essential. How about summarising key successes in bullet points and pasting them on the back of the toilet doors? Hard to ignore!

One problem with feedback is that many of the statistics about climate and emissions are very difficult to imagine. What does a tonne of CO2 look like, for example? These things need to be related to everyday experience - maybe something like the volume of Wembley Stadium. Or you could have a graphic on your website. What about a green tree which grows additional leaves as the company increases its carbon savings?

Sometimes there can be negative motivation at corporate level. The attitude of major customers and pressure from taxes and other outside factors can all make their mark. For example, supermarkets are very keen that their suppliers should be as efficient as possible, but then they expect these efficiencies to be passed on to them in lower prices. Secondly, since energy prices and waste disposal costs are rising, companies have to make continued efforts just to stay in the same place. BT is introducing its Climate Stabilisation Index to take account of the fact that while its emissions are rising the number of clients and services provided is rising as well, and the net footprint per transaction is falling. (This may be good PR, but the fact is that the objective is to cut CO2 emissions by 80% absolutely, regardless of the level of economic activity.) The Carbon Reduction Commitment comes into force next year and already some people are concerned that it will be biased against organisations that are already efficient.

So, in summary, here are our TOP TEN TIPS for motivating staff to be green:

1. Align messages with your corporate commitment

In other words - walk the talk. Make sure your policy is consistent both internally and externally - and seen to be so.

2. Provide an incentive

Maybe a bonus scheme, maybe an award ceremony, maybe both.

3. Choose an initiative that will reach everyone

Or let people choose their own challenges

4. Monitor progress

Otherwise how do people know what they’ve achieved?

5. Provide positive feedback

Thank-you may be enough; others may need a cash reward. Make it a win-win situation.

6. Provide resources to support action

Time can be as valuable as money

7. Be imaginative

Keep the ideas coming

8. Keep the momentum

Have a plan. There must always be the next success to strive for.

9. Continue to improve the process

Build on the knowledge gained from feedback

10. Empower people to get involved

The best way to ensure success in any field!

Cyber Associates can design your sustainability strategy, train your staff and set up the feedback loop to keep them engaged and motivated.

www.cyber-associates.com

Carbon Reduction Commitment

Is CRC just another tax?

If you’re liable for the Carbon Reduction Commitment (CRC) you should have heard from the Environment Agency by now. This measure will affect about 20,000 UK organisations - public and private - who pay for their electricity via a ‘half-hour’ meter. That’s any organisation with a peak load exceeding 100kW. About 5,000 of these will be spending £500,000 or more annually on electricity, and they will be full participants in the scheme. What does this mean? Any organisation with a half-hour meter will have to report its energy use and its carbon footprint. Not just for the department with the heavy electricity usage, but for the whole organisation including subsidiaries, branch offices and remote sites. Not just electricity consumption, but gas and fuel oil as well. Auditable records must be kept and there are penalties for non-compliance. Reporting starts now and in April 2011 the 5,000 largest users will have to pay for their CO2 emissions at £12/tonne, both for actual emissions in 2010/11 and forecast emissions in 2011/12. How much will that be for your organisation?

So is this just another tax? The government might say not, because in October 2011 it’s going to give all this money back - yes, every penny. What’s the point? On the basis of actual emissions in 2010/11 the government will construct a league table, ranking organisations according to how good they have been at reducing their emissions. When the government returns the levy the best performers will get more than they paid and the worst performers will get less. And the following year the targets will get harder.

This is all part of the obligation under the Climate Change Act to cut CO2 by 34% by 2020 and 80% by 2050. With UK emissions still growing, even standing still will be difficult. The oil price has been on the rise for most of this year, so energy is going to be expensive to buy and if you use it inefficiently the government is making it expensive to use!

Whatever the size of your organisation, have you got an environmental management system (EMS)? An EMS is a system of procedures and controls providing a framework for the management of energy, resources and waste. It will help you identify your energy usage and carbon footprint, to control them and monitor the savings achieved.

Cyber Associates have the skills and experience to help you design, implement and maintain an Environmental Management System for your organisation to ISO 14001.

More information at www.cyber-associates.com

Low Carbon Futures - The Prince's May Day Summit

Last Friday I attended the Prince’s May Day Summit. That’s the Prince of Wales’s third annual convention of businesses committed to a low carbon future, sponsored by Carbon Action Yorkshire, CE Electric UK and KCom Group. The event links London to regional centres all round the country, at least the first one did two years ago. We voted on issues, shared the results with the nation and spoke direct to the national audience. A bit like the Last Night of the Proms, actually, with big screens and reporters across the country. Not this time, though. This year we watched as the Prince and other speakers addressed what looked like a very small London audience. And we only watched - there was no feedback from the regions.

Strange - and disappointing - because since the Carbon Budget and Obama’s green grandstanding, low carbon and climate change are almost mainstream. I was at the regional session in Hull, an enthusiastic meeting ably chaired by Peter Hobday. If we hadn’t had the London link I’d have come away encouraged that more and more people were on side. In Hull the presentations were positive. They didn’t minimise the climate change risks and they showed us best practice and they showed us opportunities. They made us realise that the world is fundamentally changing, that established and accepted business models may suddenly cease to be relevant and unimagined models may suddenly steal your market. Think Amazon. Think iTunes store.

Case studies showed how companies are actively reducing their carbon footprint, and doing it for business reasons. Ariel low-temperature detergent was developed because more CO2 was released through heating water in the washing machine than in the rest of the production, distribution and usage cycle. Marshalls the paving people were the first to footprint all 500 of their products - the nearest competitor has footprinted nine - and they now know how and where to cut carbon further. Their customers know that this is a company which is serious about the environment. ASDA recycles, sources locally and deals with sustainable suppliers. KCOM engages with staff to support its green initiatives.

We learnt about scenario planning; not as a means of predicting the future nor as business continuity planning. Scenarios ask “What if?” What if your key materials double or quadruple in price? What if energy rises by a factor of 10? What if your major customer goes bust? Examining such scenarios helps your company be prepared. The value is in the process, not the result; the process of questioning unquestioned truths, establishing the consequences, weighing the risks and defining the options.

One statistic that I won’t forget showed that while material wealth has steadily grown in the UK since 1960, satisfaction has stayed at the same level. Apparently, we do not need material wealth for a fulfilling life. The problem is that growth has been the only goal for more than a generation; we have no alternative vision and people are scared to give up what they have.

So here’s the challenge. Let’s stop scaring people with global meltdown, climate catastrophe and the end of the world. Let’s draw up our low carbon futures and show people how they can be more relaxing, more fulfilling and maybe more stimulating than the ambitions we have now. At least I came away from the May Day Summit believing that we certainly have the people who can imagine these futures - and the people able and determined to make them reality.

Is the future of your business a low-carbon future? It’s got to be! If you want to talk about how, give me a call - 01904 654986.

Electric Cars? Electric Dreams!

Why do government pronouncements keep bringing the phrase "Away with the fairies" to mind? So the future is the electric car. Where are we supposed to get the electricity from? We have no surplus electricity; we have ageing power stations with replacements at least a decade away and a national grid close to capacity. We generate our electricity from imported coal (dirty), imported gas (expensive since the pound fell) and nuclear (overdue for replacement). Renewables provide 5% at best and will take time and money to increase their unpredictable and intermittent output.

The UK is on the brink of an energy crisis and the answer is not Noddy cars but urgent and comprehensive energy conservation.

Insulate, insulate, insulate, and dare to ask the question, "Is your journey really necessary?"

Sustainable Savings

SUSBIZ Sustainable Business Strategies.

A few notes on how climate change and sustainability affect business. I’m going to talk about the Archbishop of Canterbury, Lord Stern and the Institute of Directors. I’m running a teleclass with a few places left on Tuesday, and next week I shall be going up to the Low Carbon Best Practice Exchange in Newcastle. The RPI has come down, the CPI has gone up but the COBRA Matrix will help you deal with it, and at the beginning of May the Prince of Wales has his Mayday Summit on Climate Change.

Although the economy is in a state that nobody has seen for many, many years, it hasn’t pushed climate change and sustainability off the agenda. Pressure is coming from all quarters. The latest is the Archbishop of Canterbury who said that the case for action on climate change was a moral as well as a practical one. On Tuesday’s Radio 4 Today Programme he warned that billions could die if governments and individuals did not take moral responsibility for climate change now. Didn’t James Lovelock say much the same a few weeks ago? This comes after Lord Stern’s presentation to the Copenhagen Climate Conference when he said that the situation was very much worse than he had thought when he prepared his report on the economic consequences of climate change back in 2006.

But let’s not be negative! At a recent Institute of Directors event addressed by IOD environment spokesman David Boomer and by Todd Holden from Enworks we were told how adopting environmental policies could lead to a direct improvement in the bottom line. On the basis of studying more than 2000 companies it’s been shown that they saved 8% on energy, 2% on materials, 13% on water and up to 50% on waste. You can do a lot of this without spending any money. Apparently 70% of savings come from behaviour change. If you do need to invest to save, there’s a range of low carbon grants and soft loans. I’ve recently been looking at the work of Bob Willard who is a specialist in sustainable business based in Canada who also talks about the savings on staff costs which can be made from environmental policies; from improved morale and productivity to lowered recruitment costs and less turnover. It all depends on the structure of your business, of course, but anything that can make a quantifiable improvement to your bottom line, particularly in the present economic climate, must be valuable regardless of where it comes from.

Next Tuesday 31st March I’m running a teleclass which will cover these points and expand on them. This event is by invitation only but there are one of two places still available so if you want to take part please log on now to this link and you’ll find full details. The session will take place at 18:00 BST but if you can’t make it there will be a recording which will be available the following day.

Next week on 2nd April I shall be running a roundtable discussion session at the Low Carbon Best Practice Forum in Newcastle. If you haven’t already registered for the event go to www.Carbon–innovation.com

The big news this week is that inflation is going up, or at least it is as far as the Consumer Price Index is concerned. It’s risen from 3% to 3.2% while the Retail Price Index has declined to zero; no change. The difference is that the RPI includes housing costs which have been falling as house prices fall and mortgage rates are cut. Both these inflation indices are very crude instruments; it all depends on your lifestyle as to whether your costs are rising or falling. The other issue is the oil price. It peaked at $147 last July and crashed to $36 in January. Now it’s on the rise again - and after adjusting for the exchange rate in the UK it’s halfway back to last year’s peak.

In business, each organisation has its own set of risk factors and I’ve derived the COBRA Matrix to help managers balance impact against possibility. I’ll be covering this in Tuesday’s teleclass and there will be examples of the COBRA approach in the accompanying working papers. Download them here.

As I said to start with, pressure and the realization of the impact of climate change are coming from all quarters. On 1st May the Prince of Wales’s Mayday Summit on Climate Change takes place for the third year running. It brings together businesses at regional centres all over the country to report on progress and to commit to Carbon Reduction and environmental improvements for the year ahead. You can sign up here.

Government regulations demand that business become environmentally responsible and despite the economic environment, consumers are continuing to demand that organisations are green as well. You can find details of a survey published by the Carbon Trust here.

You don’t have to look far to find people who say how dreadful, how terrible, how earth-shattering the risks from climate change are. I prefer to concentrate on the opportunities for staying in business and staying in profit. In the coming weeks I shall be interviewing people from the Carbon Trust and Virgin Media among others to reinforce the positive message.

If you want to add your comments I look forward hearing from you. Add them to this blog or give me a call.
My name’s Anthony Day and my number is 01904654986. I hope we’ll talk soon.

The Age of Stupid

Do we need another misery movie?

Review: The Age of Stupid - premiere at Leicester Square and 65 cinemas across the country.

In The Age of Stupid Pete Postlethwaite addresses us from the wrecked planet of 2055 and asks how we could be so stupid as to let climate change destroy humanity. He flicks through endless archives showing us the obvious clues to catastrophe from 2009 and before. It seemed a long film, partly because technical problems meant that about 30 minutes of footage was played twice. Partly, too, because it replayed the breast-beating and lamentations already seen in Al Gore’s An Inconvenient Truth, Leonardo di Caprio’s The Eleventh Hour, The Day After Tomorrow and all the rest.

What these films lack, and that includes the live debate following The Age of Stupid, is a credible call to action. Watching this film you might conclude that the best thing to do is to run your car on chip fat, live self-sufficiently on a small holding and protest against the nasty nimbies who oppose wind farms. It goes without saying that there’s not enough chip fat and not enough smallholdings. The effectiveness of wind farms is also very much in doubt. After the film Pete Postlethwaite pledged to give back his OBE if the government approved the proposed new Kingsnorth coal-fired power station. Ed Milliband was there to respond, but they let him off extremely lightly by not once mentioning government support for Heathrow’s third runway. Surely that’s a much more powerful national political issue than some power station down in Kent.

Sustainable economic growth is still possible in a low carbon economy, but if we are going to solve this problem we must all drive less, heat less and consume less. Life will be very different - potentially much more pleasant - if we take the low-carbon route. The Age of Stupid has missed the opportunity to show what ordinary people can do to safeguard our future, and to show what sort of future we can all enjoy if we act now. Certainly the showing raised enthusiasm both in Leicester Square and in the cinema where I was, but I fear that people will be rushing off to protest, rather than rushing off to change their lives.

Panic Over?

Tanker drivers back at work - oil price stable (more or less) - Dyson to build electric cars and Honda launches a hydrogen car - five new main railway lines - retail sales up in May - Gordon in Saudi - ...and a renewable energy strategy which will cut our use of oil. So is it all over?

I’ve been away on holiday and it’s amazing what can change in a week. Before you ask, no, we didn’t fly anywhere, we went to Newcastle by train and walked the whole length of Hadrian’s Wall. (Well, all but 10 miles!)

Hello. I'm Anthony Day and I’m back again to talk to you about staying in business and staying profitable. Last time we were worried about the price of oil and a tanker drivers’ strike which was making petrol unobtainable as well as unaffordable. This week the drivers have gone back to work for a pay rise of only 14% and oil has (almost) stopped rising. But who’s worried about oil when there are suddenly a range of alternatives?

First, James Dyson, the vacuum cleaner king, is turning his talents to designing electric cars. He’s developed a super-efficient electric motor. Honda have announced their hydrogen car and Network Rail are looking into building no less than five new high-speed rail lines across the UK. The feel-good factor is reinforced by the news that retail sales in May were the highest for 22 years, but if you still think we need cheaper oil Gordon’s been out there in Saudi not only asking them to pump faster but also suggesting that they should invest in renewables in the UK.On 26th June the government publishes its Renewable Energy Strategy. The predictions are that this will include plans for 3,500 wind turbines and will reduce the nation’s use of oil by 7% by 2020.

So is this all good news? Is the panic over? Can we all go back to making money? People accuse me of being depressing, but all I’m trying to do is be realistic and look at the best choices for business in a future that’s far from clear.

The most important point is that we have an energy crisis, and while there are solutions like electric cars, new railway lines and thousands of wind turbines; none of these can become a reality in less than 5 years and the rest will take more like ten or twenty. Oil prices are high today. They may drift up and down over the coming months, but they are unlikely to drop below $100. My prediction is $180 by the end of the year and $300 by the end of 2010 unless we see a dramatic global recession. as I predicted last time, gas and electricity are on the rise and some reports talk of a 40% increase by Christmas.

As business people, what can we do? Maybe we should try a protest - it worked well for the tanker drivers! However, few businesses can hold their customers to ransom like that. Rather than waste time and effort on protests and demonstrations (a bit like Canute trying to turn back the waves) we should consider what to do to make the best of it. We need to assess the effect on our supply chain; on our suppliers and our customers. This need not be negative - suppliers of home insulation are surely going to see an upturn!

We need to act now, but we also need to plan for the future. Scenario planning lets you prepare for a number of alternative futures and therefore be more ready to cope with what actually happens. Take some time with your team to brainstorm to think the unthinkable and decide what you could do about it.

The truth is that the future is not rosy for those who believe that we can go back to business as usual. The good news is not good when we examine it in detail. For example, electric cars need to be built and bought, and are you going to buy one? How much energy will it take to replace the UK’s 30m cars? We’ll all charge them up a night when electricity demand is low - except demand won’t be low because we’ll all be charging our cars. So we’ll need more coal or gas or nuclear to run the power stations. Could be a bit of a problem as we are already finding it difficult to cope with current demand for electricity without all this demand displaced from oil. Much the same applies to hydrogen. The car itself is pollution-free but there’s a massive carbon footprint at the power station where they generate the energy to produce the hydrogen. The renewables strategy will apparently reduce our dependency on oil by 7% over 12 years. Given that North Sea oil output is declining by about 6% per annum, this is merely a drop in the bucket. And even Gordon Brown admitted that his visit to Saudi would have no immediate effect on prices at the pumps.

My message is that we have to plan for a different future in order to succeed. Those that don’t, like Canute, will first get their feet wet and then be washed away.

I’m Anthony Day. If you want to talk about scenario planning for how energy, climate and resources will affect your business, give me a call on 01904 654 986.

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.

Listen here!

I know I haven't been posting for a while. That's because I've been podcasting. You can catch up with my latest thoughts at www.susbiz.biz

This week you'll hear thoughts on keeping your business in business - fossil fuels or bio-fuels? - Paul Clarke on why it makes sense to drive a green car (www.green-car-guide.com) - carbon targets, carbon trading and better use of resources from Mike Smith at Yorkshire Forward (www.yorkshire-forward.com) - and has someone got it in for cows?

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"The time for doubt has passed"

That’s what U.N. Secretary-General Ban Ki-moon said at yesterday’s Climate Change summit. The chief U.N. climate scientist, Rajendra Pachauri, said, “The time is up for inaction.”

Billed as the largest ever high-level meeting on climate change, the event re-emphasised the commitment of global governments to action. The next opportunity will be the Bali conference in December, when delegates meet to design a successor to the Kyoto Protocol. This commits nations to a reduction in greenhouse gas emissions by 2012. The task of Bali is to set targets for future decades.

Doubts remain, however, with George W Bush. The US president did not attend the summit, although he joined the delegates for dinner. He has his own climate change event later this week and has invited the world’s sixteen top polluting nations. Environmentalists are concerned that the US wants to hijack the debate, or at least muddy the waters. The US is believed to oppose mandatory carbon targets, preferring each country to set voluntary levels. They also want developing countries to reduce their carbon emissions, even though they are far lower than American emissions.

The US has an increasingly difficult energy supply situation, though it has plenty of coal – one of the most polluting fuels. Cutting back on energy use or making energy more expensive by installing carbon clean-up technology will impact the American economy – currently showing signs of weakness - and George Bush will protect it at all costs.AAfter all, wasn’t it George Bush Snr who said, “It’s the economy, stupid”?

Some people are beginning to say, “No, it’s the environment, stupid.” Without an environment there can be no economy.

Liberal Helping

As the LibDem conference comes to a close we’ve seen another expression of green policies. The LibDems are particularly upset, because alone of the three major parties they have been talking about environmental issues for years. Both Labour and the Conservatives now have a green agenda, but the worrying thing is that there’s no consensus.

Measures that will really make a difference to our carbon emissions will not be popular with the voters. Two million signed a Downing Street petition against road pricing, and last week I saw one of those chain emails claiming that high petrol prices were an oil company conspiracy and we could drive prices down to 69p a litre if we only stopped buying from Esso and BP. If all the political parties adopted the same policies on the environment then elections would change nothing. Unfortunately there is still argument between the parties – and argument within parties. One LibDem was heard to say that green policies were about as realistic as perpetual motion! More public education clearly needed.

And will the parties stop arguing about green issues and work together to actually do something? As the Labour Party gathers for this week’s conference we can only wait and see.

They think it's all over

Latest reports from the IPCC, the United Nations’ Intergovernmental Panel on Climate Change, indicate that a 2 degree rise in world temperatures is inevitable – within 10 years. There is now so much excess carbon dioxide in the global system that it is too late to stop this happening; there’s nothing we can do. It’s time to face up to the consequences and prepare to adapt to them.

Ironically the prosperous West may benefit form the temperature rise in the short term. Higher temperatures will mean substantially increased crop yields in North America, Northern Europe and Russia. Elsewhere the opposite is true. In some parts of the Third World flash floods will wash the crops from the fields and destroy buildings, bridges and roads. Rising sea levels will make other places uninhabitable – already parts of the Maldives have had to be abandoned.

Too much water in some places; too little elsewhere as the Himalayan glaciers melt and the rivers they fill run dry. Up to a billion people will lose their water supply. Many species will become extinct and diseases will appear in places where they have never been seen before.

All this sounds apocalyptic. Too dreadful to be true. Turn the page – let’s not think about it. And what can we do about it anyway? And there on the next page is an advertisement from the energy company Total. “Total is pursuing the development of gas fields across the globe…” And burning more gas releases more CO2. Three degrees? Four degrees? Six degrees?

It needs government action. It needs big business to take action. What we can do is be aware of what is going to happen and be aware of how it will change our lifestyles. We need to do as much as we can to cut our individual carbon footprints. We can change public opinion. Enough public opinion influences government and changes business behaviour.

Within 10 years. That means it won’t just affect our children or our grandchildren. It’s going to affect us.