Green-collar jobs are the biggest prize

Published Date: 13 September 2008
By Charles Henderson

WITH Europe aiming to generate a fifth of its energy from renewable technologies by 2020, and the UK hoping to contribute a tenfold increase in energy it generates this way, to 15 per cent, a green vision has been set for the next decade.
The government is consulting industry and planners, and the Renewable Energy Strategy (RES), due for publication next year, will set out the route-map for this green transformation.There are three energy types to consider – electricity, heat and transport – each with different technologies and demand. For example, renewable electricity is relatively established, but, renewable heat and transport has almost no installed capacity.To meet our 15 per cent target, we need to ensure each sector grows considerably. The RES suggests increases of 32 per cent of electricity (from less than 5 per cent today), 14 per cent in heat (1 per cent today) and 10 per cent transport (under 1 per cent today)If we do not meet one sector target, we will need to exceed in another, or trade carbon with other countries."Whilst we were burning North Sea oil, Germany were building the wind turbines, and Scandinavian countries were building biofuel wood burners," explains Jason Ormiston, the chief executive of trade association Scottish Renewables, But he is positive about Scottish renewables industries: "With the certainty of renewable energy targets in the RES, businesses will plan the finance, resources, and production they need," he says."This will be good news for Scotland, which is a leader in manufacturing wave and tidal technologies, and offshore engineering. Based on the evidence of the government's support of wind-generated electricity, I believe we could transform the way we generate heat and power transport."Adam Bruce, chair of the British Wind Energy Association (BWEA), is equally positive future of renewable energy: "With renewables, we have a great opportunity to put people back in touch with the energy they consume, and contribute to Scottish communities," he says.Scotland currently generates three gigawatts (GW) of energy from its renewable installations – with hydro-electric and wind making up the vast majority, at about 1.4 GW each. A GW of electricity is enough to power about 650,000 homes.According to the RES consultation, key growth areas are expected to be wind power, with up to 28 GW of extra UK capacity, split roughly 50/50 between on and offshore. This could represent a further 7,000 turbines, depending on size, in addition to the 2,000 or so already installed.According to Mr Bruce, the next phase of onshore development in Scotland is likely to take place down the M74 corridor, then the Highlands, with offshore development possible in the Shetland Isles, Dogger Bank and English west coast.Heating accounts for 47 per cent of UK carbon emissions, but only about a half of 1 per cent is generated directly from renewables. Heat cannot travel for long distances, so technologies must be local. The likely solutions are biomass (such as heat from wood burning) and microgeneration (including solar water heating and heat pumps). Most effective is combined heat and (electricity) power (CHP) generation, in the community.Demands for wood from industries such as furniture manufacture, could be a barrier to large-scale biomass use. Nevertheless, Balcas, a biofuel company, will next year open its £24m plant in Invergordon, which will produce enough wood pellets to heat 20,000 homes every year, provide electricity to the grid and create 38 full-time posts. In all, investment in the renewable sector could represent up to £60 billion by 2020, stimulating 160,000 "green collar" jobs, according to the government's Forum for Renewable Energy Development in Scotland (FREDS). If the opportunity is seized, many of these could be in Scotland.Offshore wind, for example, needs construction, cable laying, and decades of maintenance. Burntisland Fabrications, in Fife, employs up to 500 for its construction contracts, and demand for offshore turbine bases represents a growing workload. Marine energy is also promising. Scotland's wave and tidal power resources are estimated at 10 per cent and 25 per cent of the EU totals respectively. Scottish Renewables estimates that a fifth of the UK's electricity could be produced in Scottish waters. Businesses such as Edinburgh-based Aquamarine Power are developing wave and tidal technologies to help reduce Scotland's emissions. Future overseas export of the technologies will also help balance Scotland's energy payments deficit.Carbon is one of the more esoteric markets that economists have dreamt up. The right to trade pollution credits may seem bizarre, or downright unethical to some, but this "flexible mechanism" is a vital device to tackle climate change. A "carbon credit" is created when a new measure, process or technology (including energy efficiency, renewable energy and forestry) reduces or absorbs carbon emissions, and ownership of the "difference" is claimed.By putting a limit on emissions, at a country, business, or even personal level, and allowing trading to take place, the most cost-effective solution may be reached. Once carbon is valued in this way, it is commoditised and written into financial models, such as development plans. Carbon finance will, one day, make the world go round.The market for carbon credits doubled in size globally, to $64bn in 2007, and will boom over the next few years. The European Emissions Trading Scheme, for power stations and primary manufacturers, is the world's largest, covering four-tenths of the EU's total greenhouse gas emissions. To come, is the Carbon Reduction Commitment, which will include a further 5,000 UK businesses and public sector organisations, including hotels and hospitals, from 2010. The City of London is a growing carbon hub – and Scottish banks have a toehold.Investment managers have long recognised "carbon risk", as well as clean technology opportunities. The Carbon Disclosure Project (CDP) informs investors, representing over $41 trillion of assets under management, with a unique analysis of how the world's largest companies are responding to climate change.HBoS has been ranked as a climate leader by the CDP. With 23 million customers, 66,000 employees and £100bn of funds under management, it can use its influence to good effect. The bank reduces and offsets all its direct emissions, and was the first in Europe to announce its intention to carbon label a banking product. HBOS is keeping a watching brief on carbon trading.The RBS Group, with 40 million customers and 170,000 employees, influences the carbon debate at a high level. It recently co-hosted a summit on the low-carbon economy. The bank is a leading carbon trader, and works with Scottish businesses, amongst its many clients. It also offers a voluntary carbon offset service to businesses and individuals. RBS has a long commitment to the energy sector and is ranked in the top ten clean technology investors, worldwide, with $1.5 billion committed in 2007 alone. Although a large proportion of its investments are in conventional fossil fuelled power, clean technology is a growing portfolio. "Political leadership on carbon bodes well for the Scottish economy, as it sends an important signal, and attracts investment," says Gavin Tait, head of carbon trading at RBS. He adds: "Carbon trading could be a good thing for Scotland, as it plays into the hands of countries which lead the way in clean energy."Scotland's potential for renewable energy is large, and its stake in the carbon market is relatively small, but significant and growing. In Monday's article, we will find out how some of our leading businesses in food, drink, transport and water are tackling the climate challenge.• Charles Henderson is director of Climate Futures, an Edinburgh-based consultancy. www.climatefutures.co.uk. The third article in this series will appear on the business pages on Monday.