Trash smells sweet to investors as soaring commodities prices result in a boom for the US waste recycling industry. Roben Farzad reports
Sunday, 3 August 2008
Bob Cappadona, area manager of Casella Waste Systems' 65,000sq ft recycling facility in Massachussets, can't believe the record prices his garbage is commanding. "Aluminium cans, $900 [£450] a bale. Tin cans, $150. No 2 clear plastic, $300. Cardboard, $70. Mixed paper, $40." He barely conceals his glee as he explains the effects of a spike in metal prices: "We get an extra $100 a ton."
Mr Cappadona's numbers are compelling, but the global implications of the trash boom only really hit you when you see the enormous pallets being carted away from the plant. You realise that recyclers can make vast profits from combing through ordinary rubbish, processing it and then reselling it to other companies. And that leads to another, bigger thought: trash is no longer just an environmental liability. It is becoming a financial asset. And it is everywhere.
Or so it would seem.
The possibilities have venture capitalists and buyout firms scrambling to invest in a melange of quirky start-ups that might have provoked belly laughs from these same financiers five years ago. The broad category of "waste and recycling", which includes everything from materials recovery to sewage biotechnology, drew a record $622m of investment in 2007, compared with $245m a year earlier and just $20m in 2001, according to Cleantech Group, a green investing consultancy. Sober investors are throwing money not only at established recyclers like Cas-ella Waste, but also at bolder ventures like trash-to-ethanol start-ups and e-waste recyclers, so confident are they that there's real cash in trash.
More than anything, it's the commodities boom – or bubble, if you prefer – that's nudging garbage to the asset side of earth's balance sheet. The calculus is simple: as the prices of oil and other raw materials rise, recycled products become more attractive.
Consider that 8 per cent of global oil production is siphoned off to make plastic each year. Recycled plastic, however, requires 80 per cent less energy to produce. Recycled aluminium burns up 95 per cent less energy. Recycled iron and steel use 74 per cent less, while paper requires 64 per cent less.
The money can pile up quickly: one ton of recycled aluminium saves an average of $700 in electricity. The Environmental Protection Agency estimates that if the recycling rate were to increase by just five points, to 35 per cent, this would save the equivalent of almost two billion gallons of gasoline annually.
The recycling industry, a loose and unruly assortment of start-ups and multinationals, can barely keep up with demand. Today virtually all steel made by the American giants Nucor and AK Steel comes from scrap metal – a boon for recyclers such as Chicago's Metal Management, whose sales jumped 40 per cent from 2006 to 2007.
The great reappraisal of trash has even prompted a Wall Street analyst to cordon off recycling in a separate investment category, like consumer goods or emerging markets. Eric Prouty of the Boston-based brokerage Canaccord Adams started following recyclers full-time in 2006; now he covers 11 publicly traded companies. Since its inception late in 2006, Mr Prouty's six-stock "buy" list has returned 180 per cent, trouncing the 2 per cent rise in Standard & Poor's 500 index'.
"Recycling," Mr Prouty believes, "might be the most overlooked beneficiary of the commodities boom."
Of course, there's been similar excitement before. In the 1970s and again in the early 1990s, oil prices zoomed and joyless austerity began to seep into American culture. Governors signed deposit laws, and cities and towns launched recycling programmes. Investors started buying up scrap metal outfits, sure they were catching a big business wave. But commodity prices tanked in the mid-Eighties and again in the early Nineties and the movement lost steam each time. Elaborate municipal recycling programmes no longer made economic sense and were abandoned, even in environmentally conscious garbage havens such as New York. Scrap metal became a joke on Wall Street. Lassitude ruled. Today's recycling boom could still suffer a similar fate.
"If commodity prices fall, people will be unwilling to bear higher tax rates from cities to maintain unprofitable recycling programmes," warns John Charles, president of the Cascade Policy Institute, a non-partisan think-tank in Oregon.
The optimists point to a new factor they say will help the industry withstand the next commodities bust: the green movement. Global warming has finally pierced the American popular consciousness amid a litany of complaints from eco-activists. The US generates the world's greatest volume of per capita waste, yet badly lags in recycling; Americans are too thoughtless to reuse plastic water bottles; discarded computers and cell- phones are leaching toxins into the soil; and on and on.
Methane-spewing landfills, meanwhile, are turning into battlegrounds. Municipalities can't easily build new dumps because people refuse to live near one. The acronym Nimby (Not In My Back Yard) is giving way to Banana (Build Absolutely Nothing Anywhere Near Anything). Yet old landfills are closing at an alarming rate: in 1988 there were some 8,000 operating in the US; today there are just over 1,700. In some parts of the world the clashes are turning violent. Italy's Prime Minister, Silvio Berlusconi, dispatched soldiers to Naples, where demonstrators were protesting against his efforts to open a big new landfill. Since last year, when that city declared all of its dumps full, ranges of trash have piled up.
But while the world's swelling garbage pile would seem to be a can't-miss opportunity for recyclers, one issue threatens their long-term growth prospects. Oddly enough, they can't get enough garbage, or at least the right kind. That's because all waste, like all politics, is local – which means idiosyncrasies in recycling laws and a failure on the part of politicians to see the big picture. Recycling "has historically been dominated by staid, stubborn and inefficient industries", says Cleantech's managing partner, John Balbach. "There's lots of money to be saved – and made – in waste if financial discipline and profit-mindedness take hold."
That's Wall Street's bet, anyway.
Sunday, 3 August 2008
Water industry free to poison beaches
From The Sunday Times
August 3, 2008
Unregulated overflow pipes allow companies to pour sewage onto Britain’s coastline
Jon Ungoed-Thomas
As you drive along the B3301 in north Cornwall, you come across the rocks and golden sands of Godrevy, overlooking St Ives Bay. It is among the finest beaches in Britain but on some days there is an unmistakable odour: sewage.
“You can smell it sometimes when you cross the Red River, which flows onto the beach,” said Richard Hardy, campaign director of Surfers Against Sewage. “Families sometimes play in the water without realising there is a serious risk of getting ill.”
About a mile upstream along the Red River is a sewage works where the overflow pipes are cut into the river banks. During heavy rain, flood waters and raw sewage surge out of the overflow pipes, down the Red River and on to Godrevy beach.
To veteran users of the beach, there is usually one fail-safe indicator of a pollution incident: cotton buds. “Where there are cotton buds, there is sewage, because of the numbers that are flushed down toilets,” Hardy said. “We pick hundreds of them off the beach.”
According to European Union water quality standards, Godrevy’s water enjoys high levels of cleanliness. However, only 20 tests are conducted during the bathing season and they often fail to detect the sporadic pollution from sewage overflows.
The case of Godrevy highlights a threat to the water industry’s £10 billion drive to improve the cleanliness of Britain’s beaches. There are hundreds of beaches around the country that, like Godrevy, might at times have raw sewage running across their sands because of the wetter weather and a sewage system “at bursting point”.
While the water industry has been praised for improving the cleanliness of coastal waters – shutting most of the raw sewage outfalls off the coast – about one in four beaches still fails to qualify for the EU’s top category.
The Marine Conservation Society (MCS), which produces the Good Beach Guide, wants to see stricter controls on sewage overflows which can still blight many of the country’s beaches. It has also discovered Britain has a network of about 3,500 sewage overflows operating on the country’s rivers and along some sections of coast without any environmental conditions. This means they can spew out unlimited amounts of sewage without risk of prosecution.
The number of beaches recommended by MCS dropped by 10% last year. This is partly attributed to agricultural pollution, but also the overflow of sewage in wet weather. According to data compiled by the society, more than 100 beaches that have regulated sewage overflow outlets had declining water quality in 2007, compared with the previous year.
One of those beaches was Whitburn beach, Sunderland. Residents complain it is regularly blighted by sewage and related debris. The pipe that carries storm water and sewage out to sea is several hundred yards offshore but, it is claimed, pollution washes back to the beach.
A local authority report of an incident last April reported 500 items of sewage debris strewn along the promenade and beach-front. Robert Latimer, 64, who lives on the seafront, said: “You get sewage everywhere. They were only meant to use this outfall 20 times a year, but sewage is coming out all the time.” Another beach that has seen its water quality decline is the shoreline at Instow, at the confluence of the River Torridge and the Taw estuary in north Devon. It was one of the few beaches to fail the legal minimum water quality standards last year.
Farming effluent is partly blamed for the decline, but the beach also has a sewage overflow. It may also be adversely affected by overflows from the Torridge. Data obtained by MCS reveals that the river has five sewage overflows that have no environmental limits on the amount of sewage they can discharge.
Britain’s unregulated sewer overflow pipes are predominantly on the river network and are a throwback to when the water industry was privatised in 1989. At that time, there were more than 20,000 sewage overflow outlets and they were granted “deemed consent” as an interim measure to ensure the assets of the new companies were lawful. It has now emerged that 3,500 of these sewage outlets are still operating without any environmental conditions.
As well as the Torridge, rivers with unregulated sewage overflows include the Thames, the Cherwell in Oxfordshire, the Don in South Yorkshire and Calder in Lancashire. The Anglers’ Conservation Association (ACA) is also calling for tough legal restrictions to be placed on these overflows.
Since The Sunday Times’s Water Rats campaign highlighted the devastating impact of river pollution at the time of water privatisation, water quality in rivers has significantly improved, partly because of improved environmental practices, but also because of the decline of heavy industry.
However, the unregulated sewage overflows in effect mean water companies can pollute watercourses without risk of prosecution. The ACA says a pollution leak in June 2005 when hundreds of fish were killed by sewage in a river near Manchester was never pursued in the courts because the overflow operated by United Utilities was one of those with “deemed consent”.
United Utilities was unable to trace details of the pollution incident this weekend, but the Environment Agency said the fact the overflow had deemed consent was just one of the reasons a prosecution was not pursued. In a similar leak, in the summer of 2006, fish on the River Don were described as jumping out of the water “gasping for breath” and thousands were killed. The overflows operated by Yorkshire Water were also subsequently discovered to have deemed consent and there was no prosecution.
The ACA says the Environment Agency is failing adequately to tackle the water industry over pollution. In a submission to the agency, it has warned that pollution from overflows had led to a “reduction in fish” and the routine sight of “physical residue of sewage discharges hanging on bankside vegetation”.
The agency said this weekend that the overflows with deemed consents were not considered to be causing serious pollution, but new restrictions would be imposed on them. Chris Chubb, discharge consents policy manager for the agency, said overflow pipes were being replaced or improved where possible.
Additional reporting: Georgia Warren
Waste law
One of the most unsightly and irritating sights on Britain’s coast is sewage or related debris dumped by boats.
Under international maritime law ships are prohibited from discharging raw sewage within 12 miles of the coast. (Beyond that it is not considered a pollution risk.) If the waste has been treated it must be dumped at least three miles offshore.
Ships must be fitted with a sewage treatment plant or holding tank.
The maritime laws apply only to vessels that carry more than 15 people. Pleasure craft are subject to Environment Agency regulations and local harbour bylaws.
In tidal waters there is no blanket rule against dumping of sewage, as effluent may quickly be dispersed, but harbour bylaws often prohibit it.
August 3, 2008
Unregulated overflow pipes allow companies to pour sewage onto Britain’s coastline
Jon Ungoed-Thomas
As you drive along the B3301 in north Cornwall, you come across the rocks and golden sands of Godrevy, overlooking St Ives Bay. It is among the finest beaches in Britain but on some days there is an unmistakable odour: sewage.
“You can smell it sometimes when you cross the Red River, which flows onto the beach,” said Richard Hardy, campaign director of Surfers Against Sewage. “Families sometimes play in the water without realising there is a serious risk of getting ill.”
About a mile upstream along the Red River is a sewage works where the overflow pipes are cut into the river banks. During heavy rain, flood waters and raw sewage surge out of the overflow pipes, down the Red River and on to Godrevy beach.
To veteran users of the beach, there is usually one fail-safe indicator of a pollution incident: cotton buds. “Where there are cotton buds, there is sewage, because of the numbers that are flushed down toilets,” Hardy said. “We pick hundreds of them off the beach.”
According to European Union water quality standards, Godrevy’s water enjoys high levels of cleanliness. However, only 20 tests are conducted during the bathing season and they often fail to detect the sporadic pollution from sewage overflows.
The case of Godrevy highlights a threat to the water industry’s £10 billion drive to improve the cleanliness of Britain’s beaches. There are hundreds of beaches around the country that, like Godrevy, might at times have raw sewage running across their sands because of the wetter weather and a sewage system “at bursting point”.
While the water industry has been praised for improving the cleanliness of coastal waters – shutting most of the raw sewage outfalls off the coast – about one in four beaches still fails to qualify for the EU’s top category.
The Marine Conservation Society (MCS), which produces the Good Beach Guide, wants to see stricter controls on sewage overflows which can still blight many of the country’s beaches. It has also discovered Britain has a network of about 3,500 sewage overflows operating on the country’s rivers and along some sections of coast without any environmental conditions. This means they can spew out unlimited amounts of sewage without risk of prosecution.
The number of beaches recommended by MCS dropped by 10% last year. This is partly attributed to agricultural pollution, but also the overflow of sewage in wet weather. According to data compiled by the society, more than 100 beaches that have regulated sewage overflow outlets had declining water quality in 2007, compared with the previous year.
One of those beaches was Whitburn beach, Sunderland. Residents complain it is regularly blighted by sewage and related debris. The pipe that carries storm water and sewage out to sea is several hundred yards offshore but, it is claimed, pollution washes back to the beach.
A local authority report of an incident last April reported 500 items of sewage debris strewn along the promenade and beach-front. Robert Latimer, 64, who lives on the seafront, said: “You get sewage everywhere. They were only meant to use this outfall 20 times a year, but sewage is coming out all the time.” Another beach that has seen its water quality decline is the shoreline at Instow, at the confluence of the River Torridge and the Taw estuary in north Devon. It was one of the few beaches to fail the legal minimum water quality standards last year.
Farming effluent is partly blamed for the decline, but the beach also has a sewage overflow. It may also be adversely affected by overflows from the Torridge. Data obtained by MCS reveals that the river has five sewage overflows that have no environmental limits on the amount of sewage they can discharge.
Britain’s unregulated sewer overflow pipes are predominantly on the river network and are a throwback to when the water industry was privatised in 1989. At that time, there were more than 20,000 sewage overflow outlets and they were granted “deemed consent” as an interim measure to ensure the assets of the new companies were lawful. It has now emerged that 3,500 of these sewage outlets are still operating without any environmental conditions.
As well as the Torridge, rivers with unregulated sewage overflows include the Thames, the Cherwell in Oxfordshire, the Don in South Yorkshire and Calder in Lancashire. The Anglers’ Conservation Association (ACA) is also calling for tough legal restrictions to be placed on these overflows.
Since The Sunday Times’s Water Rats campaign highlighted the devastating impact of river pollution at the time of water privatisation, water quality in rivers has significantly improved, partly because of improved environmental practices, but also because of the decline of heavy industry.
However, the unregulated sewage overflows in effect mean water companies can pollute watercourses without risk of prosecution. The ACA says a pollution leak in June 2005 when hundreds of fish were killed by sewage in a river near Manchester was never pursued in the courts because the overflow operated by United Utilities was one of those with “deemed consent”.
United Utilities was unable to trace details of the pollution incident this weekend, but the Environment Agency said the fact the overflow had deemed consent was just one of the reasons a prosecution was not pursued. In a similar leak, in the summer of 2006, fish on the River Don were described as jumping out of the water “gasping for breath” and thousands were killed. The overflows operated by Yorkshire Water were also subsequently discovered to have deemed consent and there was no prosecution.
The ACA says the Environment Agency is failing adequately to tackle the water industry over pollution. In a submission to the agency, it has warned that pollution from overflows had led to a “reduction in fish” and the routine sight of “physical residue of sewage discharges hanging on bankside vegetation”.
The agency said this weekend that the overflows with deemed consents were not considered to be causing serious pollution, but new restrictions would be imposed on them. Chris Chubb, discharge consents policy manager for the agency, said overflow pipes were being replaced or improved where possible.
Additional reporting: Georgia Warren
Waste law
One of the most unsightly and irritating sights on Britain’s coast is sewage or related debris dumped by boats.
Under international maritime law ships are prohibited from discharging raw sewage within 12 miles of the coast. (Beyond that it is not considered a pollution risk.) If the waste has been treated it must be dumped at least three miles offshore.
Ships must be fitted with a sewage treatment plant or holding tank.
The maritime laws apply only to vessels that carry more than 15 people. Pleasure craft are subject to Environment Agency regulations and local harbour bylaws.
In tidal waters there is no blanket rule against dumping of sewage, as effluent may quickly be dispersed, but harbour bylaws often prohibit it.
A Green New Deal for our times
Independent experts reveal a radical vision for energy, climate change and Britain's financial system
Andrew Simms
The Observer,
Sunday August 3 2008
Banks wobbling, massive fuel price rises, the vulnerability of the food supply chain... it looks like a long, uncomfortable and shaky summer. Then there is an even more threatening problem: a biosphere threatened by potentially irreversible global warming.
Britain faces a 'triple crunch,' a combination of a credit-fuelled financial crisis, accelerating climate change and soaring energy prices underpinned by an encroaching peak in oil production. These threaten to develop into a perfect storm, the like of which has not been seen since Great Depression.
To help prevent this, a group of specialists in finance, energy and the environment has been meeting since early 2007. Something along the lines of our Green New Deal can, we believe, begin to stabilise the crisis. And we can also lay the foundations for low-carbon economies, rich in jobs and more based on independent sources of energy.
With food and energy insecurity set to rise, this will create a more stable economic environment in which there is likely to be a lot more local production and distribution, but will fit a pattern of global reform, where the goals of international poverty reduction and 'one-planet living' become more viable.
The deal combines economic stabilisation in the short term with longer-term restructuring of the financial, taxation and energy systems. It is a massive environmental transformation whose economic boost will insulate us against recession, while delivering the rapid transition needed if we are to play our role in averting runaway climate change.
First is a focus on the specific needs of the UK. This includes a vision for a low-carbon energy system that will include making 'every building a power station'. Involving tens of millions of properties, their energy efficiency will be maximised, as will the use of renewables to generate electricity. This will require a £50bn-plus a year crash programme.
Linked to this is the creation of an 'carbon army' of workers. The plan envisions hundreds of thousands of high- and lower-skilled jobs created in the UK. This will be part of a wider shift from an economy narrowly focused on financial services and shopping to one that is an engine of environmental transformation. Germany is already employing 250,000 in renewable energy alone.
Next, we need to ensure more realistic fossil fuel prices that include the cost to the environment, and are high enough to tackle climate change by creating the economic incentive to drive efficiency and bring alternative fuels to market.
At $10 a barrel, oil companies were in profit; at around $130, they are rolling in unearned cash. We advocate a version of the Norwegian approach, establishing an Oil Legacy Fund, paid for by a windfall tax on the profits of energy companies. The monies raised would help deal with the effects of climate change and smooth the transition to a low-carbon economy. Norway built up its oil surpluses to weave a safety net that at the last count was worth around £198bn.
But we need wide-ranging financial innovations and incentives if we are to assemble the billions that need to be spent. The focus should be on investments and regulations that not only finance the development of efficient energy infrastructure but also help to reduce demand for energy.
Vitally, we need much tighter controls on lending and the generation of credit. Very large banks make very large mistakes. Instead of institutions that are 'too big to fail', we need those small enough to fail without creating problems for depositors and the wider public.
Because of the banking system's growing inherent instability, we need to break up discredited financial institutions that have relied on huge amounts of public money to prop them up in the credit crunch. The Green New Deal calls for the forced demerger of large banking and finance groups. We need to return finance to its role as servant, not master, of the global economy. This means, in part, the restoration of policy autonomy to democratic government, and implies the reintroduction of capital controls.
Recent months have revealed how thin is the ice upon which our economic livelihoods depend. Highly abstract and complex derivative products and other exotic financial instruments have finally divorced the finance sector not just from the productive and social, core economies, but from any recognisable reality.
Behind collateralised debt obligations, is only thin air, wishful thinking and greed. All such exotic instruments should be subject to official inspection. Only those approved should be permitted to be traded.
Our proposal is a first word, not the last. If you can enhance the Green New Deal's response, please tell us.
· Andrew Simms is policy director and head of the climate change programme at the new economics foundation. This article is adapted from the report 'A Green New Deal: joined-up policies to solve the triple crunch of the credit crisis, climate change and high oil prices' available at www.neweconomics.org.
Andrew Simms
The Observer,
Sunday August 3 2008
Banks wobbling, massive fuel price rises, the vulnerability of the food supply chain... it looks like a long, uncomfortable and shaky summer. Then there is an even more threatening problem: a biosphere threatened by potentially irreversible global warming.
Britain faces a 'triple crunch,' a combination of a credit-fuelled financial crisis, accelerating climate change and soaring energy prices underpinned by an encroaching peak in oil production. These threaten to develop into a perfect storm, the like of which has not been seen since Great Depression.
To help prevent this, a group of specialists in finance, energy and the environment has been meeting since early 2007. Something along the lines of our Green New Deal can, we believe, begin to stabilise the crisis. And we can also lay the foundations for low-carbon economies, rich in jobs and more based on independent sources of energy.
With food and energy insecurity set to rise, this will create a more stable economic environment in which there is likely to be a lot more local production and distribution, but will fit a pattern of global reform, where the goals of international poverty reduction and 'one-planet living' become more viable.
The deal combines economic stabilisation in the short term with longer-term restructuring of the financial, taxation and energy systems. It is a massive environmental transformation whose economic boost will insulate us against recession, while delivering the rapid transition needed if we are to play our role in averting runaway climate change.
First is a focus on the specific needs of the UK. This includes a vision for a low-carbon energy system that will include making 'every building a power station'. Involving tens of millions of properties, their energy efficiency will be maximised, as will the use of renewables to generate electricity. This will require a £50bn-plus a year crash programme.
Linked to this is the creation of an 'carbon army' of workers. The plan envisions hundreds of thousands of high- and lower-skilled jobs created in the UK. This will be part of a wider shift from an economy narrowly focused on financial services and shopping to one that is an engine of environmental transformation. Germany is already employing 250,000 in renewable energy alone.
Next, we need to ensure more realistic fossil fuel prices that include the cost to the environment, and are high enough to tackle climate change by creating the economic incentive to drive efficiency and bring alternative fuels to market.
At $10 a barrel, oil companies were in profit; at around $130, they are rolling in unearned cash. We advocate a version of the Norwegian approach, establishing an Oil Legacy Fund, paid for by a windfall tax on the profits of energy companies. The monies raised would help deal with the effects of climate change and smooth the transition to a low-carbon economy. Norway built up its oil surpluses to weave a safety net that at the last count was worth around £198bn.
But we need wide-ranging financial innovations and incentives if we are to assemble the billions that need to be spent. The focus should be on investments and regulations that not only finance the development of efficient energy infrastructure but also help to reduce demand for energy.
Vitally, we need much tighter controls on lending and the generation of credit. Very large banks make very large mistakes. Instead of institutions that are 'too big to fail', we need those small enough to fail without creating problems for depositors and the wider public.
Because of the banking system's growing inherent instability, we need to break up discredited financial institutions that have relied on huge amounts of public money to prop them up in the credit crunch. The Green New Deal calls for the forced demerger of large banking and finance groups. We need to return finance to its role as servant, not master, of the global economy. This means, in part, the restoration of policy autonomy to democratic government, and implies the reintroduction of capital controls.
Recent months have revealed how thin is the ice upon which our economic livelihoods depend. Highly abstract and complex derivative products and other exotic financial instruments have finally divorced the finance sector not just from the productive and social, core economies, but from any recognisable reality.
Behind collateralised debt obligations, is only thin air, wishful thinking and greed. All such exotic instruments should be subject to official inspection. Only those approved should be permitted to be traded.
Our proposal is a first word, not the last. If you can enhance the Green New Deal's response, please tell us.
· Andrew Simms is policy director and head of the climate change programme at the new economics foundation. This article is adapted from the report 'A Green New Deal: joined-up policies to solve the triple crunch of the credit crisis, climate change and high oil prices' available at www.neweconomics.org.
Tackle fuel poverty and climate change together
Editorial
The Observer,
Sunday August 3 2008
Since oil and gas are costly to produce and much in demand, it makes sense that they are expensive to use. Given the additional cost to Britain of dependency on unreliable energy-exporting regimes and the cost to the world of climate change it is also, arguably, no bad thing if high prices encourage people to be frugal with fuel.
But that is no consolation to those who struggle to pay for even modest energy consumption. It is the poorest in society who suffer most when heating bills soar.
So when last week, customers of British Gas learnt simultaneously that their fuel bills would go up by around a third and that the company's owner, Centrica, made profits of £992m, they did not accept the news as evidence of global markets not working properly. They were angry.
That puts pressure on the government to intervene with a windfall tax on energy companies. The appeal, both political and moral, of taking from rich businesses and giving to poor households at a time of great economic anxiety is straightforward, the arguments against such a course of action less so.
The energy companies insist that there is no simple correlation between the profits they make from diverse global operations and the amount they charge UK customers. They also argue that they need money to invest in infrastructure, especially if they are to meet government targets for developing renewable sources of energy.
Business leaders and some Conservatives state a more dogmatic free-market case in defence of the energy industry. Windfall taxes, they say, frighten investors and damage Britain's competitiveness, signalling that profitability is liable to be punished.
There is some reason in those arguments, but no solution to the basic problem: how to alleviate fuel poverty next winter and consume less energy in the future.
The government sees this as a competition between short-term and long-term goals: either bail out customers now or let companies keep their money in the hope that they will invest for greater benefits later on. Labour is not minded, according to Energy Minister Malcolm Wicks, 'to sacrifice fuel poverty on the altar of climate change'.
The reality is that fuel poverty and climate change can and must be tackled together. But it requires sufficient vision on the part of government - literally insulating the nation from the twin threats. At least 12 million UK households are poorly insulated, costing each around £200 per year in higher bills. As more than a quarter of UK carbon emissions come from heating and lighting, the environmental impact of this wastefulness is huge.
There are schemes, like the government's 'Warm Front' grants, to help people conserve energy. But there is nothing approaching the kind of mass programme that would make a difference to the way the average Briton consumes fuel. And while energy companies have shown some willingness to help people conserve energy, their efforts have been largely symbolic. It runs counter to commercial logic for any business to spend significant resources discouraging the use of its product.
A much more activist approach is required by government. That does not mean hitting the energy companies with a crude tax that would, in all likelihood, by purloined by the Treasury to cover its other liabilities. A neater solution has been identified by the Liberal Democrats. They advocate compelling energy producers to divert money they have made through the European Union emissions trading scheme. Since they got those lucrative permits free from the government, they have enjoyed a de facto subsidy - £9bn over five years, according to energy regulator Ofgem.
The government is prevented from embracing such a scheme through fear of anything that looks like state meddling in the affairs of private companies. Tories do not so much fear apparent meddling as despise it on ideological grounds.
So it is to the Liberal Democrats' credit that they have grasped some simple truths about the relationship between climate change and household energy use: protecting people from the cold is an urgent public good, not a private consumer choice. Likewise reducing household carbon emissions.
The utility companies have responsibilities to the public just as pressing as the commercial dues they owe to shareholders. Ideally, they can be enlisted in voluntary partnership with government in an ambitious strategy to transform the way Britain's homes are powered. But if they are not willing, government has a moral right - a duty even - to force them to meet their social obligations.
The Observer,
Sunday August 3 2008
Since oil and gas are costly to produce and much in demand, it makes sense that they are expensive to use. Given the additional cost to Britain of dependency on unreliable energy-exporting regimes and the cost to the world of climate change it is also, arguably, no bad thing if high prices encourage people to be frugal with fuel.
But that is no consolation to those who struggle to pay for even modest energy consumption. It is the poorest in society who suffer most when heating bills soar.
So when last week, customers of British Gas learnt simultaneously that their fuel bills would go up by around a third and that the company's owner, Centrica, made profits of £992m, they did not accept the news as evidence of global markets not working properly. They were angry.
That puts pressure on the government to intervene with a windfall tax on energy companies. The appeal, both political and moral, of taking from rich businesses and giving to poor households at a time of great economic anxiety is straightforward, the arguments against such a course of action less so.
The energy companies insist that there is no simple correlation between the profits they make from diverse global operations and the amount they charge UK customers. They also argue that they need money to invest in infrastructure, especially if they are to meet government targets for developing renewable sources of energy.
Business leaders and some Conservatives state a more dogmatic free-market case in defence of the energy industry. Windfall taxes, they say, frighten investors and damage Britain's competitiveness, signalling that profitability is liable to be punished.
There is some reason in those arguments, but no solution to the basic problem: how to alleviate fuel poverty next winter and consume less energy in the future.
The government sees this as a competition between short-term and long-term goals: either bail out customers now or let companies keep their money in the hope that they will invest for greater benefits later on. Labour is not minded, according to Energy Minister Malcolm Wicks, 'to sacrifice fuel poverty on the altar of climate change'.
The reality is that fuel poverty and climate change can and must be tackled together. But it requires sufficient vision on the part of government - literally insulating the nation from the twin threats. At least 12 million UK households are poorly insulated, costing each around £200 per year in higher bills. As more than a quarter of UK carbon emissions come from heating and lighting, the environmental impact of this wastefulness is huge.
There are schemes, like the government's 'Warm Front' grants, to help people conserve energy. But there is nothing approaching the kind of mass programme that would make a difference to the way the average Briton consumes fuel. And while energy companies have shown some willingness to help people conserve energy, their efforts have been largely symbolic. It runs counter to commercial logic for any business to spend significant resources discouraging the use of its product.
A much more activist approach is required by government. That does not mean hitting the energy companies with a crude tax that would, in all likelihood, by purloined by the Treasury to cover its other liabilities. A neater solution has been identified by the Liberal Democrats. They advocate compelling energy producers to divert money they have made through the European Union emissions trading scheme. Since they got those lucrative permits free from the government, they have enjoyed a de facto subsidy - £9bn over five years, according to energy regulator Ofgem.
The government is prevented from embracing such a scheme through fear of anything that looks like state meddling in the affairs of private companies. Tories do not so much fear apparent meddling as despise it on ideological grounds.
So it is to the Liberal Democrats' credit that they have grasped some simple truths about the relationship between climate change and household energy use: protecting people from the cold is an urgent public good, not a private consumer choice. Likewise reducing household carbon emissions.
The utility companies have responsibilities to the public just as pressing as the commercial dues they owe to shareholders. Ideally, they can be enlisted in voluntary partnership with government in an ambitious strategy to transform the way Britain's homes are powered. But if they are not willing, government has a moral right - a duty even - to force them to meet their social obligations.
Pension funds join to fight climate change
Hugh Wheelan
The Observer,
Sunday August 3 2008
A group of the world's biggest pension funds brought together privately by Prince Charles and known informally as the P8, an allusion to the G8 group of the world's wealthiest nations, is to release an action plan this summer on fighting climate change using their investments.
It will be sent to world governments with the aim of lobbying for regulatory and financial support that could enable pension funds to start using their financial muscle to take stakes in companies developing sustainable energy products. The investors, which collectively manage about $3 trillion in retirement assets, met the prince last week to discuss the document's final contents.
A spokesman for the University of Cambridge Programme for Industry, which runs the Prince of Wales' Business & the Environment Programme, said the prince had participated personally in the debate, and the investors are expected to reach a final agreement this month.
The P8 group - actually 10 pension funds, three each from Europe, Asia, and the US plus one from Australia - is understood to include the Universities Superannuation Scheme, which runs more than £30bn for UK higher education workers. Other members are ABP, the pension plan for Dutch civil servants, as well as CalPERS and CalSTRS, the two largest US pension funds, which manage the retirement pots of Californian civil servants and teachers respectively.
The plan is expected to outline the scale of investment needed in firms specialising in renewable energy and carbon dioxide reduction technologies if countries are to meet international emissions cuts targets. It will suggest how pension fund capital could better finance such companies to meet these objectives.
In June, Gordon Brown announced plans to build up Britain's clean power supply in order to reach the EU-imposed target of producing 15 per cent of the country's energy from renewable sources by 2020. He said it would require £100bn of investment from the private sector, which the government will encourage with financial incentives.
Pension funds are considered a prime source of potential investment because their long-term horizons are ideal for investing early and consistently in the companies that will produce profitable clean energy solutions.
Last September, the prince brought together 37 UK insurance companies to launch ClimateWise, an initiative to tackle climate change and encourage responsible environmental behaviour by insurance clients. Launching that initiative, he said: 'We have to think of this as if we were in a wartime situation.'
· Hugh Wheelan is Editor of Responsible-Investor.com
The Observer,
Sunday August 3 2008
A group of the world's biggest pension funds brought together privately by Prince Charles and known informally as the P8, an allusion to the G8 group of the world's wealthiest nations, is to release an action plan this summer on fighting climate change using their investments.
It will be sent to world governments with the aim of lobbying for regulatory and financial support that could enable pension funds to start using their financial muscle to take stakes in companies developing sustainable energy products. The investors, which collectively manage about $3 trillion in retirement assets, met the prince last week to discuss the document's final contents.
A spokesman for the University of Cambridge Programme for Industry, which runs the Prince of Wales' Business & the Environment Programme, said the prince had participated personally in the debate, and the investors are expected to reach a final agreement this month.
The P8 group - actually 10 pension funds, three each from Europe, Asia, and the US plus one from Australia - is understood to include the Universities Superannuation Scheme, which runs more than £30bn for UK higher education workers. Other members are ABP, the pension plan for Dutch civil servants, as well as CalPERS and CalSTRS, the two largest US pension funds, which manage the retirement pots of Californian civil servants and teachers respectively.
The plan is expected to outline the scale of investment needed in firms specialising in renewable energy and carbon dioxide reduction technologies if countries are to meet international emissions cuts targets. It will suggest how pension fund capital could better finance such companies to meet these objectives.
In June, Gordon Brown announced plans to build up Britain's clean power supply in order to reach the EU-imposed target of producing 15 per cent of the country's energy from renewable sources by 2020. He said it would require £100bn of investment from the private sector, which the government will encourage with financial incentives.
Pension funds are considered a prime source of potential investment because their long-term horizons are ideal for investing early and consistently in the companies that will produce profitable clean energy solutions.
Last September, the prince brought together 37 UK insurance companies to launch ClimateWise, an initiative to tackle climate change and encourage responsible environmental behaviour by insurance clients. Launching that initiative, he said: 'We have to think of this as if we were in a wartime situation.'
· Hugh Wheelan is Editor of Responsible-Investor.com
Understanding climate change
Dr Sam Willis
Understanding the scope and speed of climate change is a formidable problem for modern climate scientists. One way they approach this is to use historical observations of climate to generate computer models of the global climate system. Such models are essential for the prediction of future climate change and the need for them is now particularly acute because of concerns about the speed of global warming: climate scientists need as much data as possible about past climate, and they need it now.
Much work has been done on historical climate data from terrestrial sources, such as the observatories at Greenwich, Edinburgh and Kew, the archives of National Meteorological Services, private institutions and individuals who kept climate data for their own research. Historical marine data has also been used extensively. However, the more data that goes into the models the better the results. Recently it has become evident that ships’ logs could be an excellent source for that data.
Hundreds of thousands of these log books survive, the vast majority of them in British archives. Watch officers of merchant ships, warships, submarines, whaling ships, exploration ships, survey ships and passenger ships, worldwide, recorded climatic observations, locations and dates in their ship’s log books. The most rigorous did so every two hours. Some even recorded instrumental air pressure and sea temperature.
The value of these sources for climate scientists, however, lies not only in the sheer quantity of this material, but also in the fact that the observations were made at sea. More than 75% of the world’s surface is covered by ocean; it is one of the defining characteristics of the earth as a planet. The quality of observations made at sea moreover, is necessarily more ‘pure’ than those made on land. There are no mountain ranges to create wind systems of their own, nor are there cities to increase temperature or create smog. Land-bound the majority of us may be, but it is to the sea we must turn to understand this aspect of our planet.
Related Links
Captains’ logs yield climate clues
By far the largest of the collections of log books is that of the Royal Navy, held at the National Archives in Kew. The pioneering scientist and Royal Naval Hydrographer Francis Beaufort was perhaps the first to acknowledge their potential for the study of the climate. "There are at present", he wrote "1000 King’s vessels employed. From each of them there are from two to eight log books deposited every year in the Navy office; those log books give the wind and weather every hour…what better data could a patient meteorological philosopher desire?".
These books survive in stunning condition, the earliest bound in calfskin and all of them beautifully conserved. Necessarily, some reveal the expected wear of life on a warship. Occasionally the handwriting scrawls as the ship is jolted by a wave; some have suffered from damp or have even survived a drenching. Others are stained with ink, wine or blood. Some are barely legible while others are written by the most expressive and cursive script. In amongst this chaos, above or alongside comments on the most significant events of that day, the climatic observations are ever present, a steady stream of knowledge that reaches out to us today. It is this knowledge that is providing detailed knowledge of the dramatic increase in air and sea temperature that characterises climate change as we know it.
In principle the process is quite simple. Digital images of the logs are taken and the data recorded in an international databank. This can then be manipulated to provide sophisticated re-creations of climate on single voyages, in distinct sea areas, or for the world itself. Necessarily there are some gaps in that data. In the age of sail, for example, the ships took predictable sailing routes, restricted by the direction of the prevailing wind and the known location of safe landfalls. The tracks of millions of voyages, therefore, run like deep scars across the oceans.
However, the tracks of explorers such as Cook, Vancouver and Flinders who pioneered western exploration of the Pacific, that of the Beagle, in which Darwin developed his theories of evolution, or that of Shackleton’s Endurance in its doomed voyage to the south pole, leave traces of delicate silky threads in the vastness of the unknown. These voyages, as voyages of science and exploration, all provide data of exceptional variety and quality, but the most basic data of the earliest log-books – those made before barometers or thermometers were invented – can still be used to illustrate historical climate over long periods or specific events such as the Great Storm of 1703, the fiercest hurricane ever to hit British shores in which four British warships foundered and an estimated 10,000 lives were lost.
From a global perspective there are also some gaps according to nationality. French, Spanish, Dutch, American, even Chilean naval logs all survive, but the majority of log books of the Japanese Navy which would have been invaluable for expanding our knowledge of climate change in the Pacific, were destroyed in the chaos at end of the Second World War. Similarly, the great Lisbon earthquake of 1750 destroyed records of the earliest Portuguese seafarers from the age of discovery. Nevertheless, it is the logs of ships that for centuries fought each other for control of the sea that are now being used to fight the war against climate change.
The digitisation of the logs has also created a stunning resource for historians to exploit. They also record punishment, death and disease, even daily accidents - it is surprising how many sailors dropped cannon balls on their feet. They record the details of battle, damage received, men killed and wounded. For vessels of exploration they even record initial contact with people whose first sight of western civilisation was an armed warship. The finest examples are illustrated by the officers, with sketches of landscapes that are now lost to history.
To see these is to look through the eyes of a sailor, to stand on the heaving decks of a warship and gaze on an unknown land a quarter of a century ago. For both historians and scientists the liberation of this resource is one of the most tantalising promises of the twenty-first century.
For more information, see the ACRE, CLIWOC and RECLAIM websites, all projects involved in the recreation of historic climate.
http://brohan.org/hadobs/acre/acre.html
http://www.ucm.es/info/cliwoc
http://icoads.noaa.gov/reclaim
Dr Sam Willis is an Honorary Fellow at the University of Exeter Centre for Maritime Historical Studies. He is the author of Fighting at Sea in the Eighteenth Century: The Art of Sailing Warfare, Fighting Ships 1750-1850 and Fighting Ships 1850-1950. He has worked as a maritime history consultant for Christie's and the BBC.
Understanding the scope and speed of climate change is a formidable problem for modern climate scientists. One way they approach this is to use historical observations of climate to generate computer models of the global climate system. Such models are essential for the prediction of future climate change and the need for them is now particularly acute because of concerns about the speed of global warming: climate scientists need as much data as possible about past climate, and they need it now.
Much work has been done on historical climate data from terrestrial sources, such as the observatories at Greenwich, Edinburgh and Kew, the archives of National Meteorological Services, private institutions and individuals who kept climate data for their own research. Historical marine data has also been used extensively. However, the more data that goes into the models the better the results. Recently it has become evident that ships’ logs could be an excellent source for that data.
Hundreds of thousands of these log books survive, the vast majority of them in British archives. Watch officers of merchant ships, warships, submarines, whaling ships, exploration ships, survey ships and passenger ships, worldwide, recorded climatic observations, locations and dates in their ship’s log books. The most rigorous did so every two hours. Some even recorded instrumental air pressure and sea temperature.
The value of these sources for climate scientists, however, lies not only in the sheer quantity of this material, but also in the fact that the observations were made at sea. More than 75% of the world’s surface is covered by ocean; it is one of the defining characteristics of the earth as a planet. The quality of observations made at sea moreover, is necessarily more ‘pure’ than those made on land. There are no mountain ranges to create wind systems of their own, nor are there cities to increase temperature or create smog. Land-bound the majority of us may be, but it is to the sea we must turn to understand this aspect of our planet.
Related Links
Captains’ logs yield climate clues
By far the largest of the collections of log books is that of the Royal Navy, held at the National Archives in Kew. The pioneering scientist and Royal Naval Hydrographer Francis Beaufort was perhaps the first to acknowledge their potential for the study of the climate. "There are at present", he wrote "1000 King’s vessels employed. From each of them there are from two to eight log books deposited every year in the Navy office; those log books give the wind and weather every hour…what better data could a patient meteorological philosopher desire?".
These books survive in stunning condition, the earliest bound in calfskin and all of them beautifully conserved. Necessarily, some reveal the expected wear of life on a warship. Occasionally the handwriting scrawls as the ship is jolted by a wave; some have suffered from damp or have even survived a drenching. Others are stained with ink, wine or blood. Some are barely legible while others are written by the most expressive and cursive script. In amongst this chaos, above or alongside comments on the most significant events of that day, the climatic observations are ever present, a steady stream of knowledge that reaches out to us today. It is this knowledge that is providing detailed knowledge of the dramatic increase in air and sea temperature that characterises climate change as we know it.
In principle the process is quite simple. Digital images of the logs are taken and the data recorded in an international databank. This can then be manipulated to provide sophisticated re-creations of climate on single voyages, in distinct sea areas, or for the world itself. Necessarily there are some gaps in that data. In the age of sail, for example, the ships took predictable sailing routes, restricted by the direction of the prevailing wind and the known location of safe landfalls. The tracks of millions of voyages, therefore, run like deep scars across the oceans.
However, the tracks of explorers such as Cook, Vancouver and Flinders who pioneered western exploration of the Pacific, that of the Beagle, in which Darwin developed his theories of evolution, or that of Shackleton’s Endurance in its doomed voyage to the south pole, leave traces of delicate silky threads in the vastness of the unknown. These voyages, as voyages of science and exploration, all provide data of exceptional variety and quality, but the most basic data of the earliest log-books – those made before barometers or thermometers were invented – can still be used to illustrate historical climate over long periods or specific events such as the Great Storm of 1703, the fiercest hurricane ever to hit British shores in which four British warships foundered and an estimated 10,000 lives were lost.
From a global perspective there are also some gaps according to nationality. French, Spanish, Dutch, American, even Chilean naval logs all survive, but the majority of log books of the Japanese Navy which would have been invaluable for expanding our knowledge of climate change in the Pacific, were destroyed in the chaos at end of the Second World War. Similarly, the great Lisbon earthquake of 1750 destroyed records of the earliest Portuguese seafarers from the age of discovery. Nevertheless, it is the logs of ships that for centuries fought each other for control of the sea that are now being used to fight the war against climate change.
The digitisation of the logs has also created a stunning resource for historians to exploit. They also record punishment, death and disease, even daily accidents - it is surprising how many sailors dropped cannon balls on their feet. They record the details of battle, damage received, men killed and wounded. For vessels of exploration they even record initial contact with people whose first sight of western civilisation was an armed warship. The finest examples are illustrated by the officers, with sketches of landscapes that are now lost to history.
To see these is to look through the eyes of a sailor, to stand on the heaving decks of a warship and gaze on an unknown land a quarter of a century ago. For both historians and scientists the liberation of this resource is one of the most tantalising promises of the twenty-first century.
For more information, see the ACRE, CLIWOC and RECLAIM websites, all projects involved in the recreation of historic climate.
http://brohan.org/hadobs/acre/acre.html
http://www.ucm.es/info/cliwoc
http://icoads.noaa.gov/reclaim
Dr Sam Willis is an Honorary Fellow at the University of Exeter Centre for Maritime Historical Studies. He is the author of Fighting at Sea in the Eighteenth Century: The Art of Sailing Warfare, Fighting Ships 1750-1850 and Fighting Ships 1850-1950. He has worked as a maritime history consultant for Christie's and the BBC.
How to slash your fuel bills - and shrink your carbon footprint
Lisa Bachelor
The Observer,
Sunday August 3 2008
Steven Jones and his wife Claire Butcher have been on something of an energy-saving mission in their home over the past two years.
The couple live in their-two bedroom terrace in Southampton with their two-year old son George.
'It started when George was born and we needed an office space because he was in the second bedroom,' says Steven. 'So we built our own own office on the back of our property from wood and insulated it with sheep's wool.'
This led to a series of improvements inside the couple's home starting with insulating the loft with Thermafleece, ditching their old washing machine for a new energy efficient one and putting up secondary double glazing. The more simple measures they have carried out include fitting draught excluders, wrapping their hot water tank in a thermal jacket and switching all their light bulbs to low energy versions.
An recent energy assessment of their house showed a reduction in energy use from twice what it should have been for the size of their property two years ago to half the average now.
'The changes have been about two things, the environment and the cost,' says Steven, who estimates he has spent less than £2,000 on the main changes to the home, thanks to a combination of energy efficiency grants and careful shopping around.
'We noticed a massive improvement in our energy usage after we did the cavity walls and insulation,' he says. 'Before we had been paying our gas bills based on estimates from our energy company but which more or less tallied with our meter readings. After our improvements those meter readings dropped dramatically.'
Ten home improvements that will cut your bills
· If your home was built between the 1920s and 1980s then you could fit cavity wall insulation and save up to £120 on heating bills.
· If your boiler is over 15 years old, replace it with a high-efficiency condensing boiler to cut bills by a third.
· Check your freezer: don't leave the door open for long, defrost regularly and check the doors seals are working.
· Even better, buy a new one and cut electric bills by £34 a year.
· Insulate your hot water tank with a jacket and save £30 a year.
· Stop heat escaping under skirting boards with beading or mastic sealant, saving you £20 a year.
· Double glaze and save £110.
· Insulate your loft to 270mm and lop up to £155 off your annual bill.
· Close curtains at dusk and stop heat escaping through the windows.
· Take a free home energy check at energysavingtrust.org.uk.
Source: Energy Saving Trust
The Observer,
Sunday August 3 2008
Steven Jones and his wife Claire Butcher have been on something of an energy-saving mission in their home over the past two years.
The couple live in their-two bedroom terrace in Southampton with their two-year old son George.
'It started when George was born and we needed an office space because he was in the second bedroom,' says Steven. 'So we built our own own office on the back of our property from wood and insulated it with sheep's wool.'
This led to a series of improvements inside the couple's home starting with insulating the loft with Thermafleece, ditching their old washing machine for a new energy efficient one and putting up secondary double glazing. The more simple measures they have carried out include fitting draught excluders, wrapping their hot water tank in a thermal jacket and switching all their light bulbs to low energy versions.
An recent energy assessment of their house showed a reduction in energy use from twice what it should have been for the size of their property two years ago to half the average now.
'The changes have been about two things, the environment and the cost,' says Steven, who estimates he has spent less than £2,000 on the main changes to the home, thanks to a combination of energy efficiency grants and careful shopping around.
'We noticed a massive improvement in our energy usage after we did the cavity walls and insulation,' he says. 'Before we had been paying our gas bills based on estimates from our energy company but which more or less tallied with our meter readings. After our improvements those meter readings dropped dramatically.'
Ten home improvements that will cut your bills
· If your home was built between the 1920s and 1980s then you could fit cavity wall insulation and save up to £120 on heating bills.
· If your boiler is over 15 years old, replace it with a high-efficiency condensing boiler to cut bills by a third.
· Check your freezer: don't leave the door open for long, defrost regularly and check the doors seals are working.
· Even better, buy a new one and cut electric bills by £34 a year.
· Insulate your hot water tank with a jacket and save £30 a year.
· Stop heat escaping under skirting boards with beading or mastic sealant, saving you £20 a year.
· Double glaze and save £110.
· Insulate your loft to 270mm and lop up to £155 off your annual bill.
· Close curtains at dusk and stop heat escaping through the windows.
· Take a free home energy check at energysavingtrust.org.uk.
Source: Energy Saving Trust
Investors who triggered a nuclear meltdown
The grand plan for nuclear power in the UK has come to a grinding halt with EDF's decision to abandon buying British Energy
Dominic O'Connell
It’s not often that the blocking of a single deal brings a whole area of national policy to a grinding halt.
Yet that is what has happened with the failed (for the moment) auction of British Energy (BE), our sole nuclear-power provider. When its sale to EDF, the French utility group, was halted on Thursday, government energy policy was derailed at the same moment.
Ministers, not least Gordon Brown, had set great store by the sale of BE to the French. It was a key part of a grand plan that would see a fleet of new nuclear stations built in Britain over the next 10 years, solving two of the government’s headaches at a stroke.
New nuclear power promises to bridge Britain’s energy gap, a shortage of electricity caused by the retirement of coal-fired stations in the middle years of the next decade. It also holds out the hope of Britain meeting its ambitious greenhouse-gas reduction targets. The pro-nuclear arguments have been swallowed hook, line and sinker by the government, which is desperate to find answers to these problems.
The marriage of the French and BE appeared to be the best way of bringing this brave new world of nuclear power quickly to reality. Each had something the other needed. BE had the sites for the new stations — essentially the same sites occupied by the existing stations — and the French had the know-how. Approved commercial-reactor designs are thin on the ground globally, and EDF, via the French power company Areva, has one ready to go. Ministers, who through their bail-out of BE in 2005 control a 35% stake in the company, were in an ideal position to bring the pair to the altar.
The government had even started planning for the next phase of the nuclear plan. Sites belonging to the Nuclear Decommissioning Authority, a government agency, were to be packaged up and sold to another consortium, which would have a different reactor design — probably one provided by Toshiba, the Japanese group.
The end result would have been a resurgent nuclear-power industry funded by international groups with deep pockets, and no reliance on one company — or one reactor design — in the future.
Unfortunately, it didn’t quite work out that way. Despite strenuous efforts, BE and its advisers never managed to get an auction going, with potential rivals to EDF, such as Germany’s RWE, falling by the wayside as the process went on. This left the French in a strong position. But shareholders were always likely to want to hold out for a better offer.
This is exactly what happened. Two leading shareholders in BE, the fund managers Invesco and M&G, do not think the price offered by the French — 765p a share, or 700p plus a share in future profits — is enough. They are also unconvinced about the structure of the deal, in particular the unusual security — a “contingent value right” — that had been devised to encapsulate the future profits. It was a bit too exotic for a mainline fund manager.
Invesco and M&G are smart investors, and they have every right to their opinion on the value of BE. I am also sure that the full story of how they came to turn down the offer has not yet come out. Were I in their shoes, though, I would take the money and run. High electricity prices mean BE is having a decent spell at the moment, but there is no guarantee that today’s price levels will persist.
More worrying for me is BE’s unhappy knack of finding problems in its current plants, in particular the AGR (advanced gas reactor) stations. There have been persistent niggles and shutdowns, to the extent that nuclear’s contribution to the nation’s power supply shrank to 15% last year, its lowest level since 1987. I would not want to bet that BE won’t find more problems with the AGRs in the future.
For the moment, however, there is no money to take. After meeting on Thursday night and contemplating Invesco and M&G’s position, BE’s directors felt it couldn’t recommend the EDF offer to shareholders.
It’s difficult to see how the circle can be squared. Unless, of course, the BE board reconvenes — after the summer holidays perhaps — and says that it will recommend the offer after all. It would be a ballsy thing to do, but it would bring matters to a head.
Dominic O'Connell
It’s not often that the blocking of a single deal brings a whole area of national policy to a grinding halt.
Yet that is what has happened with the failed (for the moment) auction of British Energy (BE), our sole nuclear-power provider. When its sale to EDF, the French utility group, was halted on Thursday, government energy policy was derailed at the same moment.
Ministers, not least Gordon Brown, had set great store by the sale of BE to the French. It was a key part of a grand plan that would see a fleet of new nuclear stations built in Britain over the next 10 years, solving two of the government’s headaches at a stroke.
New nuclear power promises to bridge Britain’s energy gap, a shortage of electricity caused by the retirement of coal-fired stations in the middle years of the next decade. It also holds out the hope of Britain meeting its ambitious greenhouse-gas reduction targets. The pro-nuclear arguments have been swallowed hook, line and sinker by the government, which is desperate to find answers to these problems.
The marriage of the French and BE appeared to be the best way of bringing this brave new world of nuclear power quickly to reality. Each had something the other needed. BE had the sites for the new stations — essentially the same sites occupied by the existing stations — and the French had the know-how. Approved commercial-reactor designs are thin on the ground globally, and EDF, via the French power company Areva, has one ready to go. Ministers, who through their bail-out of BE in 2005 control a 35% stake in the company, were in an ideal position to bring the pair to the altar.
The government had even started planning for the next phase of the nuclear plan. Sites belonging to the Nuclear Decommissioning Authority, a government agency, were to be packaged up and sold to another consortium, which would have a different reactor design — probably one provided by Toshiba, the Japanese group.
The end result would have been a resurgent nuclear-power industry funded by international groups with deep pockets, and no reliance on one company — or one reactor design — in the future.
Unfortunately, it didn’t quite work out that way. Despite strenuous efforts, BE and its advisers never managed to get an auction going, with potential rivals to EDF, such as Germany’s RWE, falling by the wayside as the process went on. This left the French in a strong position. But shareholders were always likely to want to hold out for a better offer.
This is exactly what happened. Two leading shareholders in BE, the fund managers Invesco and M&G, do not think the price offered by the French — 765p a share, or 700p plus a share in future profits — is enough. They are also unconvinced about the structure of the deal, in particular the unusual security — a “contingent value right” — that had been devised to encapsulate the future profits. It was a bit too exotic for a mainline fund manager.
Invesco and M&G are smart investors, and they have every right to their opinion on the value of BE. I am also sure that the full story of how they came to turn down the offer has not yet come out. Were I in their shoes, though, I would take the money and run. High electricity prices mean BE is having a decent spell at the moment, but there is no guarantee that today’s price levels will persist.
More worrying for me is BE’s unhappy knack of finding problems in its current plants, in particular the AGR (advanced gas reactor) stations. There have been persistent niggles and shutdowns, to the extent that nuclear’s contribution to the nation’s power supply shrank to 15% last year, its lowest level since 1987. I would not want to bet that BE won’t find more problems with the AGRs in the future.
For the moment, however, there is no money to take. After meeting on Thursday night and contemplating Invesco and M&G’s position, BE’s directors felt it couldn’t recommend the EDF offer to shareholders.
It’s difficult to see how the circle can be squared. Unless, of course, the BE board reconvenes — after the summer holidays perhaps — and says that it will recommend the offer after all. It would be a ballsy thing to do, but it would bring matters to a head.
Expert fears over green energy targets
Scottish Council for Development and Industry scrutinises plans to generate 50% of power from renewables by 2020
John Penman
Scotland's chances of hitting its target of generating 50% power from renewable sources by 2020 is to be scrutinised in an independent study by an international energy specialist.
The Scottish Council for Development and Industry (SCDI) has commissioned consultants Wood Mackenzie to look at future electricity generation in Scotland.
SCDI said it was doing so in response to widespread concerns over the economic impact of rising energy prices and uncertainty over Scotland’s future energy mix.
The SNP-led Scottish government set the ambitious 50% target last year, up from the previous administration’s figure of 40%, and set an interim target of 31% by 2011.
But it is opposed to building any new nuclear power stations and plans to block any UK government proposals for new nuclear stations in Scotland using planning legislation.
With the Cockenzie coal-fired power station and Hunterston nuclear generator projected to close in the next 10 years, Scotland could go from a significant exporter to an importer of electricity, with implications for the security of supply, jobs and economic growth. Both the UK and Scottish governments have set stretching renewable energy targets.
SCDI’s research will look at future supply of and demand for electricity, and the likelihood of Scotland hitting its target. It is expected Wood Mackenzie will report in September.
Dr Lesley Sawers, SCDI’s chief executive, said: “Rising energy prices are impacting on every sector of the Scottish economy, and there is considerable concern about the implications of the Scottish government’s refusal to allow any new nuclear generation. With planned power station closures this could mean an energy gap.
“Despite important announcements on new wind and biomass capacity in recent weeks, it is still not clear if Scotland will meet its target for 50% electricity consumed coming from renewable sources by 2020 and if we do hit the target, we need to know what this will mean in terms of costs.
“The growth of renewables brings huge opportunities for Scotland, but there are massive barriers that need to be overcome, such as the speed of the consents process and connections to the Grid, and skills shortages. Equally, there are questions that need answered about the cost and reliability of wind power and the likely contribution from wave and tidal power before 2020.”
John Penman
Scotland's chances of hitting its target of generating 50% power from renewable sources by 2020 is to be scrutinised in an independent study by an international energy specialist.
The Scottish Council for Development and Industry (SCDI) has commissioned consultants Wood Mackenzie to look at future electricity generation in Scotland.
SCDI said it was doing so in response to widespread concerns over the economic impact of rising energy prices and uncertainty over Scotland’s future energy mix.
The SNP-led Scottish government set the ambitious 50% target last year, up from the previous administration’s figure of 40%, and set an interim target of 31% by 2011.
But it is opposed to building any new nuclear power stations and plans to block any UK government proposals for new nuclear stations in Scotland using planning legislation.
With the Cockenzie coal-fired power station and Hunterston nuclear generator projected to close in the next 10 years, Scotland could go from a significant exporter to an importer of electricity, with implications for the security of supply, jobs and economic growth. Both the UK and Scottish governments have set stretching renewable energy targets.
SCDI’s research will look at future supply of and demand for electricity, and the likelihood of Scotland hitting its target. It is expected Wood Mackenzie will report in September.
Dr Lesley Sawers, SCDI’s chief executive, said: “Rising energy prices are impacting on every sector of the Scottish economy, and there is considerable concern about the implications of the Scottish government’s refusal to allow any new nuclear generation. With planned power station closures this could mean an energy gap.
“Despite important announcements on new wind and biomass capacity in recent weeks, it is still not clear if Scotland will meet its target for 50% electricity consumed coming from renewable sources by 2020 and if we do hit the target, we need to know what this will mean in terms of costs.
“The growth of renewables brings huge opportunities for Scotland, but there are massive barriers that need to be overcome, such as the speed of the consents process and connections to the Grid, and skills shortages. Equally, there are questions that need answered about the cost and reliability of wind power and the likely contribution from wave and tidal power before 2020.”
Nuclear may be key to reaching eco-goal
The Scottish government risks missing its renewables target because it has ruled out building power stations that generate energy in the most controversial way
John Penman
The Scottish government has set an ambitious target of generating 50% of Scotland’s power from renewable sources by 2020.
Scotland has an advantage over many other European countries, because we have 25% of the continent’s potential wind power and a long coastline which offers many opportunities for wave and tidal power.
Add in the already extensive hydro operations and Scotland is well ahead of the rest of the UK in generating power through non-carbon sources. But the SNP wants to achieve an interim figure of 31% by 2011.
For many people in the Scottish business world, the ability to achieve that is under question because the SNP-led government has opposed plans to build new nuclear power stations.
Nuclear does not add to the carbon footprint but is not favoured by environmentalists mainly because of the cost of building a new station and the problems disposing of radioactive material.
First minister Alex Salmond made it clear earlier this year that he sees future power generation in Scotland without the need for nuclear.
“We are not going to close nuclear power stations; they will come to the end of their lives and will be shut,” he said.
But one of Scotland’s main industry bodies, the Scottish Council for Development and Industry, wants to examine whether achieving the 50% is possible without nuclear power. It has commissioned international energy specialist Wood Mackenzie to investigate and report back by the end of September.
“Rising energy prices are impacting on every sector of the Scottish economy, and there is considerable cross-business concern about the implications of the Scottish government’s refusal to allow any new nuclear generation,” said SCDI chief executive Dr Lesley Sawers.
“With planned power station closures this could mean an energy gap, and Scotland going from a net exporter to an importer of electricity. This has potentially significant implications for security, affordability and reliability of our energy supply, and the continued growth of the economy.”
Iberdrola, the Spanish owner of Scottish Power, recently pulled out of the bidding for East KIlbride-based nuclear generator British Nuclear but has said it is interested in new nuclear build.
With the Scottish government threatening to block any planning application it is hard to see how they could build a new station in Scotland.
The renewables sector offers many opportunities for Scotland, not least because of the natural resources at our disposal, but many of the technologies in wave and tidal have yet to been proven on a commercial scale.
Scottish Power and Norwegian firm Statoil are trialling a tidal turbine that was first developed in Norway, and Ocean Power Delivery’s wave machine Pelamis continues trials off Orkney. However, in the short term wind will produce most of the renewable energy.
The SCDI study will examine whether that alone will be enough to meet the Government’s target or whether without new nuclear stations it will simply get blown off course.
John Penman
The Scottish government has set an ambitious target of generating 50% of Scotland’s power from renewable sources by 2020.
Scotland has an advantage over many other European countries, because we have 25% of the continent’s potential wind power and a long coastline which offers many opportunities for wave and tidal power.
Add in the already extensive hydro operations and Scotland is well ahead of the rest of the UK in generating power through non-carbon sources. But the SNP wants to achieve an interim figure of 31% by 2011.
For many people in the Scottish business world, the ability to achieve that is under question because the SNP-led government has opposed plans to build new nuclear power stations.
Nuclear does not add to the carbon footprint but is not favoured by environmentalists mainly because of the cost of building a new station and the problems disposing of radioactive material.
First minister Alex Salmond made it clear earlier this year that he sees future power generation in Scotland without the need for nuclear.
“We are not going to close nuclear power stations; they will come to the end of their lives and will be shut,” he said.
But one of Scotland’s main industry bodies, the Scottish Council for Development and Industry, wants to examine whether achieving the 50% is possible without nuclear power. It has commissioned international energy specialist Wood Mackenzie to investigate and report back by the end of September.
“Rising energy prices are impacting on every sector of the Scottish economy, and there is considerable cross-business concern about the implications of the Scottish government’s refusal to allow any new nuclear generation,” said SCDI chief executive Dr Lesley Sawers.
“With planned power station closures this could mean an energy gap, and Scotland going from a net exporter to an importer of electricity. This has potentially significant implications for security, affordability and reliability of our energy supply, and the continued growth of the economy.”
Iberdrola, the Spanish owner of Scottish Power, recently pulled out of the bidding for East KIlbride-based nuclear generator British Nuclear but has said it is interested in new nuclear build.
With the Scottish government threatening to block any planning application it is hard to see how they could build a new station in Scotland.
The renewables sector offers many opportunities for Scotland, not least because of the natural resources at our disposal, but many of the technologies in wave and tidal have yet to been proven on a commercial scale.
Scottish Power and Norwegian firm Statoil are trialling a tidal turbine that was first developed in Norway, and Ocean Power Delivery’s wave machine Pelamis continues trials off Orkney. However, in the short term wind will produce most of the renewable energy.
The SCDI study will examine whether that alone will be enough to meet the Government’s target or whether without new nuclear stations it will simply get blown off course.
Host of new pylons to carry wind farm power
From The Sunday Times
August 3, 2008
Jonathan Leake, Environment Editor
Pylons are on the march. Britain’s electricity transmission and distribution companies are to announce plans for a £10 billion rewiring of Britain.
A report due this autumn will warn that if Britain is serious about a low-carbon economy then it must string potentially thousands of miles of new high-voltage power cables across the country. The infrastructure is vital, experts say, because most renewable energy will be generated in remote areas such as northern Scotland or the North Sea – whereas most consumers live in southern Britain.
Some fear the new pylons and cables would threaten treasured landscapes, creating dilemmas for environmentalists who would otherwise support renewable energy without question.
“The power-generating industry is about to undergo great structural changes,” said Chris Bennett, future transmission networks manager for National Grid, which runs the high-voltage cable system.
“We are moving from a system dominated by a small number of large power stations to something far more diverse. Our network needs to adapt rapidly to those changes.”
The need for new pylons and overhead cables stems from the government’s planned shift to wind-powered generation.
Britain currently has about 78 gigawatts (GW) of generating capacity, of which about 40% comes from coal, 33% from gas and 15% from nuclear, with the rest from sources such as wind and other renewables.
By 2020, the government has pledged that more than 30GW – roughly a third of the 100GW total capacity needed by then – will come from wind turbines.
About 11GW of this is likely to be sited in northern Scotland and 19GW in offshore wind farms, mostly in the North Sea.
A report due out this autumn by Ofgem, the power regulator, and the Department for Business, Enterprise and Regulatory Reform will say such changes can happen only if existing power lines are upgraded or new ones built to link such areas with the energy-hungry Midlands and southern England.
National Grid has confirmed that it is looking at plans for high-voltage lines across mid-Wales to carry electricity from the many wind farms planned there to population centres.
In Scotland the two main “interconnector” lines that carry power south would not have the capacity to cope with the planned expansion. One option is to upgrade or augment these lines with bigger pylons and more cables.
Bennett fears such proposals could lead to “disastrous” planning delays and is considering an alternative plan to run undersea cables down the east or west coasts of northern Britain, possibly both. The east coast cables would connect to new high-voltage lines at Easington, Co Durham, while the west coast links would come ashore near Liverpool.
Offshore wind farms present separate challenges. Undersea cables carry only a maximum of about 0.5GW, so the 19GW planned for the North Sea would mean at least 40 new high-voltage cables connecting wind farms to the shore.
More pylons and cables would connect the sub-sea cables to the grid after they hit land, with clusters likely around the Wash, the Thames estuary and Liverpool bay.
Britain has about 72,000 pylons carrying high-voltage cables over 14,000 miles. Digging them underground tends to be ruled out as it costs up to £16m a mile, 20 times more than pylons, and it is difficult to disperse the heat generated.
The far greater number of smaller pylons carrying lower voltages has never been comprehensively counted. Most have been in place for decades and few new lines have been built since the 1960s.
In Scotland there is controversy over Scottish and Southern Energy’s plans for a 200-mile line of pylons up to 213ft high to carry “green” power from Beauly outside Inverness to Denny, Stirlingshire. Opponents include Lord Puttnam, the film-maker.
Steve Smith, managing director of networks at Ofgem, said the grid would need investment of about £10 billion by 2020. This is about £3 billion more than the current value of the whole system: “The existing system is incapable of delivering the low carbon power we hope to generate in future. We need to beef up existing lines and build new ones.”
August 3, 2008
Jonathan Leake, Environment Editor
Pylons are on the march. Britain’s electricity transmission and distribution companies are to announce plans for a £10 billion rewiring of Britain.
A report due this autumn will warn that if Britain is serious about a low-carbon economy then it must string potentially thousands of miles of new high-voltage power cables across the country. The infrastructure is vital, experts say, because most renewable energy will be generated in remote areas such as northern Scotland or the North Sea – whereas most consumers live in southern Britain.
Some fear the new pylons and cables would threaten treasured landscapes, creating dilemmas for environmentalists who would otherwise support renewable energy without question.
“The power-generating industry is about to undergo great structural changes,” said Chris Bennett, future transmission networks manager for National Grid, which runs the high-voltage cable system.
“We are moving from a system dominated by a small number of large power stations to something far more diverse. Our network needs to adapt rapidly to those changes.”
The need for new pylons and overhead cables stems from the government’s planned shift to wind-powered generation.
Britain currently has about 78 gigawatts (GW) of generating capacity, of which about 40% comes from coal, 33% from gas and 15% from nuclear, with the rest from sources such as wind and other renewables.
By 2020, the government has pledged that more than 30GW – roughly a third of the 100GW total capacity needed by then – will come from wind turbines.
About 11GW of this is likely to be sited in northern Scotland and 19GW in offshore wind farms, mostly in the North Sea.
A report due out this autumn by Ofgem, the power regulator, and the Department for Business, Enterprise and Regulatory Reform will say such changes can happen only if existing power lines are upgraded or new ones built to link such areas with the energy-hungry Midlands and southern England.
National Grid has confirmed that it is looking at plans for high-voltage lines across mid-Wales to carry electricity from the many wind farms planned there to population centres.
In Scotland the two main “interconnector” lines that carry power south would not have the capacity to cope with the planned expansion. One option is to upgrade or augment these lines with bigger pylons and more cables.
Bennett fears such proposals could lead to “disastrous” planning delays and is considering an alternative plan to run undersea cables down the east or west coasts of northern Britain, possibly both. The east coast cables would connect to new high-voltage lines at Easington, Co Durham, while the west coast links would come ashore near Liverpool.
Offshore wind farms present separate challenges. Undersea cables carry only a maximum of about 0.5GW, so the 19GW planned for the North Sea would mean at least 40 new high-voltage cables connecting wind farms to the shore.
More pylons and cables would connect the sub-sea cables to the grid after they hit land, with clusters likely around the Wash, the Thames estuary and Liverpool bay.
Britain has about 72,000 pylons carrying high-voltage cables over 14,000 miles. Digging them underground tends to be ruled out as it costs up to £16m a mile, 20 times more than pylons, and it is difficult to disperse the heat generated.
The far greater number of smaller pylons carrying lower voltages has never been comprehensively counted. Most have been in place for decades and few new lines have been built since the 1960s.
In Scotland there is controversy over Scottish and Southern Energy’s plans for a 200-mile line of pylons up to 213ft high to carry “green” power from Beauly outside Inverness to Denny, Stirlingshire. Opponents include Lord Puttnam, the film-maker.
Steve Smith, managing director of networks at Ofgem, said the grid would need investment of about £10 billion by 2020. This is about £3 billion more than the current value of the whole system: “The existing system is incapable of delivering the low carbon power we hope to generate in future. We need to beef up existing lines and build new ones.”
Britain's energy crisis: Twisting in the wind
Fuel bills are soaring due to our increasing reliance on imported gas. Wind power should be part of the answer but realising the government’s grand plans could end up costing the average customer an extra £400 a year
Rocketing gas prices — up 35% last week — have put the spotlight on Britain’s looming energy crisis. With North Sea oil and gas running out, we are becoming dependent on imports and risk being left at the mercy of world prices.
The government hopes two new sources of power, wind and nuclear, will bolster Britain’s supply and at the same time help to meet ambitious targets to cut greenhouse-gas emissions.
Both are in trouble. The planned expansion of wind power is being held up by a myriad of obstacles from planning objections to electricity grid constraints. The cost of investment is huge and likely to lead to even more rises in household electricity bills.
And last week the French pulled out of negotiations to buy British Energy, which runs our nuclear power stations, plunging the sector into uncertainty.
THE problems with wind power can be illustrated by the experience of Amec, the project management group.
Since the early 1990s the company had been working on plans for a wind farm near Hexham in Northumberland. This year it was given a letter from the Ministry of Defence objecting to the construction of the farm. The MoD said the 20 proposed turbines, along with two adjacent projects, would have an “unacceptable impact” on the radar systems at the Royal Air Force base at Spadeadam.
Amec was furious. It had been in contact with the MoD since 1993 about plans for a wind farm in the area and had never been told of any problems with the proposal. Now, 15 years on and nearly two years after Amec began the formal planning process, the MoD said the 125-metre towers would “clutter” radar systems and increase the likelihood of an “air disaster”.
The problem, it emerged, was that MoD technicians had wrongly mapped the positions of the turbines. Once the error was spotted, it turned out that they would be in the line of sight of Spadeadam’s two air-traffic control radars. The MoD’s blunder had suddenly left years of work, and millions of pounds of investment, blowing in the wind.
It was almost comically tragic. Yet the situation was sadly typical for Amec’s fledgling wind business. After nearly a decade, the company has managed to get only one wind farm approved; seven others have been rejected or are stuck in planning. It is no wonder that chief executive Samir Brikho, also chairman of the government’s Energy Excellence Group, decided to stop the bleeding. He put the business up for sale last month.
Even with all the problems Amec has faced, it seemed an odd move for the company. Britain is on the verge of one of the most ambitious wind-energy projects in the world as it strives to meet emissions targets and to free itself from reliance on imported energy.
Yet Amec’s experience is just a taster of the problems that stand in the way of industry and the government as they set out to achieve Gordon Brown’s 2020 goal of ringing Britain with up to 7,000 offshore wind turbines, capable of producing more than a quarter of the nation’s electricity. Today, wind power in Britain supplies only 2.5GW — one gigawatt being enough to power about 750,000 homes.
It will be a huge industrial undertaking. “We estimate that to meet renewable targets, industry will have to spend about £100 billion by 2020. It’s an unprecedented level of investment,” said Paul Golby, chief executive of Eon UK, the German-owned group that is one of Britain’s biggest power companies. Wind is expected to account for at least £60 billion of the total.
Supporters charitably call the target “ambitious”. Detractors deride it as “unachievable”, or worse, a “total scam”. On the cusp of the largest energy infrastructure investment in the country’s history, difficult questions are being asked of wind power.
Tony Lodge, a researcher at the Centre for Policy Studies, argues that wind is not the solution to Britain’s dual goals of reducing carbon emissions and replacing the 32GW of old power stations to be retired over the next decade. The subsidies required to fund development alone “will plunge thousands of households into fuel poverty. It’s a total scam,” he said. “Britain is on the precipice of a big problem.”
Golby said that meeting the renewable-energy targets will push up household bills by about £400 a year.
Aside from the cost, Lodge argues that the intermittent nature of wind means that it should remain at best a marginal power source, not the linchpin of Britain’s energy strategy.
There is nothing new in these arguments. Sceptics will never accept that the nation should be dependent on something over which we have no control — when, and how strongly, the wind blows. Yet after decades of technological advancement and research, Maria McCaffery, chief executive of the British Wind Energy Association, said that “we have dispelled the myths, we have answered the big questions”.
Indeed, the consensus in the energy industry is that the urgent need to address a looming energy gap, and pollute less while doing so, makes wind the best option.
“You can say, ‘Let’s take a carbon holiday until things like clean coal and carbon capture are ready’. But those are a decade or two away. If you believe the Stern report [on climate change], you can’t do that,” said Sarwjit Sambhi, head of power at Centrica. “Offshore wind is the best available technology, whether you like it or not.”
The problem lies in making the grand vision a reality. McCaffery calls the coming wind revolution the “biggest job-creation event since North Sea oil”, estimating that it will lead to 160,000 new jobs.
AN unassuming factory on the Isle of Wight represents about half of Britain’s wind-energy expertise. The site is where employees of Vestas, the world’s largest wind-turbine manufacturer, make giant turbine blades. Its other operation is a tower facility in Campbeltown, Scotland. That’s 1,100 workers in all.
Peter Brun, head of government relations at Vestas, said Britain has “immense promise” because it must meet the target, set by the European Union, of generating 15% of its power from renewable sources by 2020 — a four-fold increase on the present level. Even so, the company has no plans to increase its presence here.
“We set up in 2002, but we were too optimistic. There is great potential here, but speaking is one thing, and following through with practical implementation is another. That’s what we are waiting for. There are still big barriers, like access to the electricity grid and planning procedures.”
Closing the gap between the ambition of policy and the planning process is critical. According to the British Wind Energy Association (BWEA), of the 15 gigawatts worth of wind projects that have been put through the planning process since 2002, the fate of 6.5GW of projects has yet to be determined. Some have been in planning for five years. The MoD alone is responsible for holding up 10 projects because of concerns over radar interference. However, a recent memorandum of understanding that it signed with industry could help to break the impasse.
“There is no consistency, no timelines, no adherence to planning guidelines, and no transparency,” said McCaffery. “If we had those, we would have much better predictability, which would send a clear signal to industry. It’s too much of a lottery at the moment.”
A bill to reform the planning laws is in the House of Lords and is expected to be passed by next spring. It would establish an Infrastructure Planning Commission to review proj- ects, taking the power out of the hands of local councils, where they most often get bogged down.
The utilities argue that while this will certainly help with vital transmission network upgrades and offshore projects, the reform will do nothing for onshore wind farms, which are the ones that cause most protest from local communities. That’s because the Infrastructure Planning Commission will have the power to review only projects that are 50MW or larger. Nearly all onshore farms are smaller that that. “This will do nothing for onshore wind power,” said Tom Murley, head of renewable-energy investing at HG Capital.
COSTS have also soared. Demand for turbines far exceeds manufacturing capacity, and the price of the commodities used to make them, like steel, has shot up. The cost of offshore developments is now approaching £3 billion per gigawatt generated, twice what it cost five years ago.
This means that the government’s wind subsidy programme, the renewables obligation credits (ROC) scheme, already one of the most generous in Europe, will probably have to be sweetened further to attract developers to Britain. That would mean a further increase in consumers’ bills.
Under the ROC scheme, for every megawatt-hour of power that a company produces from renewable resources, including wind, it receives one ROC, effectively a green energy subsidy that helps developers recoup the huge upfront costs. The government has proposed changes to the system that will skew investment toward wind by increasing the amount given to wind power to 1.5 ROCs per megawatt-hour, and reducing the ROCs for other sources.
That may not be enough. “The ROC changes were proposed in May last year. The cost has risen significantly since then,” said McCaffery. “We may need to move up to 2.4 ROCs per megawatt-hour.”
Most of the country’s electricity transmission network, the grid, was built in the 1950s and 1960s. It is not equipped to handle the wild peaks and troughs typical of wind production. Wind’s intermittency means that developers must overbuild their sites to guarantee a minimum average output. The same would be required for the grid.
National Grid estimates that capacity — today about 80GW — will have to increase to as much as 100GW to take account of wind. And because wind farms will be dotted all over the country, and off the coast, extensions will also be necessary. All this means billions of pounds of investment. Who pays for it, and how, is a big question.
Chris Bennett, future transmission networks manager at National Grid, said: “With the combination of the age of the assets, and the new connections required for renewables, this is absolutely the biggest thing we have ever had to do.”
The company is in talks with Ofgem, which regulates the electricity and gas industries, to allow it to begin building grid connections much earlier in the process rather than being required to wait, as it now must, until a wind farm is approved and financed before it begins its end of the work. National Grid would in theory take on more of the risk upfront, but would be able to levy higher charges once a project began operation.
“A lot of money is going into transmission, and there are questions over how those costs are going to be [spread] among consumers and the industry. It is a critical issue,” said Centrica’s Sambhi.
The technological leaps that large-scale wind power would require are perhaps the most daunting piece of the jigsaw. With today’s technology, bringing the 430MW generated from Centrica’s Lincs, Lynn and Inner Dowsing offshore farms on to the beach and into the grid, for example, would require enough cables to fill a three-lane road. The three farms together are less than half the size of the London Array, the Thames Estuary project that is the largest proposed offshore farm in the world, at 1GW.
The likes of Siemens and ABB are developing new technologies to reduce the number of cables that are needed and to cut the loss of electricity as it is transmitted from miles offshore. Matthew Knight, head of power transmission at Siemens, said: “It’s all quite experimental. The five substations we are working on in Britain are much larger than anything else in the world right now.”
There are some green shoots. Last week the MoD withdrew an objection it had lodged against the 12-turbine East Riding wind farm near Beverley in Yorkshire. The move came only days after it signed its memorandum of understanding with industry, stirring hopes that the MoD will spring no more surprises like the one it gave to Amec. It is a small advance compared with the scale of the challenge at hand, but as HG Capital’s Murley said: “It’s progress.”
However, he added: “There is a huge scale-up issue that needs to be addressed. The government’s targets are not achievable.”
Rocketing gas prices — up 35% last week — have put the spotlight on Britain’s looming energy crisis. With North Sea oil and gas running out, we are becoming dependent on imports and risk being left at the mercy of world prices.
The government hopes two new sources of power, wind and nuclear, will bolster Britain’s supply and at the same time help to meet ambitious targets to cut greenhouse-gas emissions.
Both are in trouble. The planned expansion of wind power is being held up by a myriad of obstacles from planning objections to electricity grid constraints. The cost of investment is huge and likely to lead to even more rises in household electricity bills.
And last week the French pulled out of negotiations to buy British Energy, which runs our nuclear power stations, plunging the sector into uncertainty.
THE problems with wind power can be illustrated by the experience of Amec, the project management group.
Since the early 1990s the company had been working on plans for a wind farm near Hexham in Northumberland. This year it was given a letter from the Ministry of Defence objecting to the construction of the farm. The MoD said the 20 proposed turbines, along with two adjacent projects, would have an “unacceptable impact” on the radar systems at the Royal Air Force base at Spadeadam.
Amec was furious. It had been in contact with the MoD since 1993 about plans for a wind farm in the area and had never been told of any problems with the proposal. Now, 15 years on and nearly two years after Amec began the formal planning process, the MoD said the 125-metre towers would “clutter” radar systems and increase the likelihood of an “air disaster”.
The problem, it emerged, was that MoD technicians had wrongly mapped the positions of the turbines. Once the error was spotted, it turned out that they would be in the line of sight of Spadeadam’s two air-traffic control radars. The MoD’s blunder had suddenly left years of work, and millions of pounds of investment, blowing in the wind.
It was almost comically tragic. Yet the situation was sadly typical for Amec’s fledgling wind business. After nearly a decade, the company has managed to get only one wind farm approved; seven others have been rejected or are stuck in planning. It is no wonder that chief executive Samir Brikho, also chairman of the government’s Energy Excellence Group, decided to stop the bleeding. He put the business up for sale last month.
Even with all the problems Amec has faced, it seemed an odd move for the company. Britain is on the verge of one of the most ambitious wind-energy projects in the world as it strives to meet emissions targets and to free itself from reliance on imported energy.
Yet Amec’s experience is just a taster of the problems that stand in the way of industry and the government as they set out to achieve Gordon Brown’s 2020 goal of ringing Britain with up to 7,000 offshore wind turbines, capable of producing more than a quarter of the nation’s electricity. Today, wind power in Britain supplies only 2.5GW — one gigawatt being enough to power about 750,000 homes.
It will be a huge industrial undertaking. “We estimate that to meet renewable targets, industry will have to spend about £100 billion by 2020. It’s an unprecedented level of investment,” said Paul Golby, chief executive of Eon UK, the German-owned group that is one of Britain’s biggest power companies. Wind is expected to account for at least £60 billion of the total.
Supporters charitably call the target “ambitious”. Detractors deride it as “unachievable”, or worse, a “total scam”. On the cusp of the largest energy infrastructure investment in the country’s history, difficult questions are being asked of wind power.
Tony Lodge, a researcher at the Centre for Policy Studies, argues that wind is not the solution to Britain’s dual goals of reducing carbon emissions and replacing the 32GW of old power stations to be retired over the next decade. The subsidies required to fund development alone “will plunge thousands of households into fuel poverty. It’s a total scam,” he said. “Britain is on the precipice of a big problem.”
Golby said that meeting the renewable-energy targets will push up household bills by about £400 a year.
Aside from the cost, Lodge argues that the intermittent nature of wind means that it should remain at best a marginal power source, not the linchpin of Britain’s energy strategy.
There is nothing new in these arguments. Sceptics will never accept that the nation should be dependent on something over which we have no control — when, and how strongly, the wind blows. Yet after decades of technological advancement and research, Maria McCaffery, chief executive of the British Wind Energy Association, said that “we have dispelled the myths, we have answered the big questions”.
Indeed, the consensus in the energy industry is that the urgent need to address a looming energy gap, and pollute less while doing so, makes wind the best option.
“You can say, ‘Let’s take a carbon holiday until things like clean coal and carbon capture are ready’. But those are a decade or two away. If you believe the Stern report [on climate change], you can’t do that,” said Sarwjit Sambhi, head of power at Centrica. “Offshore wind is the best available technology, whether you like it or not.”
The problem lies in making the grand vision a reality. McCaffery calls the coming wind revolution the “biggest job-creation event since North Sea oil”, estimating that it will lead to 160,000 new jobs.
AN unassuming factory on the Isle of Wight represents about half of Britain’s wind-energy expertise. The site is where employees of Vestas, the world’s largest wind-turbine manufacturer, make giant turbine blades. Its other operation is a tower facility in Campbeltown, Scotland. That’s 1,100 workers in all.
Peter Brun, head of government relations at Vestas, said Britain has “immense promise” because it must meet the target, set by the European Union, of generating 15% of its power from renewable sources by 2020 — a four-fold increase on the present level. Even so, the company has no plans to increase its presence here.
“We set up in 2002, but we were too optimistic. There is great potential here, but speaking is one thing, and following through with practical implementation is another. That’s what we are waiting for. There are still big barriers, like access to the electricity grid and planning procedures.”
Closing the gap between the ambition of policy and the planning process is critical. According to the British Wind Energy Association (BWEA), of the 15 gigawatts worth of wind projects that have been put through the planning process since 2002, the fate of 6.5GW of projects has yet to be determined. Some have been in planning for five years. The MoD alone is responsible for holding up 10 projects because of concerns over radar interference. However, a recent memorandum of understanding that it signed with industry could help to break the impasse.
“There is no consistency, no timelines, no adherence to planning guidelines, and no transparency,” said McCaffery. “If we had those, we would have much better predictability, which would send a clear signal to industry. It’s too much of a lottery at the moment.”
A bill to reform the planning laws is in the House of Lords and is expected to be passed by next spring. It would establish an Infrastructure Planning Commission to review proj- ects, taking the power out of the hands of local councils, where they most often get bogged down.
The utilities argue that while this will certainly help with vital transmission network upgrades and offshore projects, the reform will do nothing for onshore wind farms, which are the ones that cause most protest from local communities. That’s because the Infrastructure Planning Commission will have the power to review only projects that are 50MW or larger. Nearly all onshore farms are smaller that that. “This will do nothing for onshore wind power,” said Tom Murley, head of renewable-energy investing at HG Capital.
COSTS have also soared. Demand for turbines far exceeds manufacturing capacity, and the price of the commodities used to make them, like steel, has shot up. The cost of offshore developments is now approaching £3 billion per gigawatt generated, twice what it cost five years ago.
This means that the government’s wind subsidy programme, the renewables obligation credits (ROC) scheme, already one of the most generous in Europe, will probably have to be sweetened further to attract developers to Britain. That would mean a further increase in consumers’ bills.
Under the ROC scheme, for every megawatt-hour of power that a company produces from renewable resources, including wind, it receives one ROC, effectively a green energy subsidy that helps developers recoup the huge upfront costs. The government has proposed changes to the system that will skew investment toward wind by increasing the amount given to wind power to 1.5 ROCs per megawatt-hour, and reducing the ROCs for other sources.
That may not be enough. “The ROC changes were proposed in May last year. The cost has risen significantly since then,” said McCaffery. “We may need to move up to 2.4 ROCs per megawatt-hour.”
Most of the country’s electricity transmission network, the grid, was built in the 1950s and 1960s. It is not equipped to handle the wild peaks and troughs typical of wind production. Wind’s intermittency means that developers must overbuild their sites to guarantee a minimum average output. The same would be required for the grid.
National Grid estimates that capacity — today about 80GW — will have to increase to as much as 100GW to take account of wind. And because wind farms will be dotted all over the country, and off the coast, extensions will also be necessary. All this means billions of pounds of investment. Who pays for it, and how, is a big question.
Chris Bennett, future transmission networks manager at National Grid, said: “With the combination of the age of the assets, and the new connections required for renewables, this is absolutely the biggest thing we have ever had to do.”
The company is in talks with Ofgem, which regulates the electricity and gas industries, to allow it to begin building grid connections much earlier in the process rather than being required to wait, as it now must, until a wind farm is approved and financed before it begins its end of the work. National Grid would in theory take on more of the risk upfront, but would be able to levy higher charges once a project began operation.
“A lot of money is going into transmission, and there are questions over how those costs are going to be [spread] among consumers and the industry. It is a critical issue,” said Centrica’s Sambhi.
The technological leaps that large-scale wind power would require are perhaps the most daunting piece of the jigsaw. With today’s technology, bringing the 430MW generated from Centrica’s Lincs, Lynn and Inner Dowsing offshore farms on to the beach and into the grid, for example, would require enough cables to fill a three-lane road. The three farms together are less than half the size of the London Array, the Thames Estuary project that is the largest proposed offshore farm in the world, at 1GW.
The likes of Siemens and ABB are developing new technologies to reduce the number of cables that are needed and to cut the loss of electricity as it is transmitted from miles offshore. Matthew Knight, head of power transmission at Siemens, said: “It’s all quite experimental. The five substations we are working on in Britain are much larger than anything else in the world right now.”
There are some green shoots. Last week the MoD withdrew an objection it had lodged against the 12-turbine East Riding wind farm near Beverley in Yorkshire. The move came only days after it signed its memorandum of understanding with industry, stirring hopes that the MoD will spring no more surprises like the one it gave to Amec. It is a small advance compared with the scale of the challenge at hand, but as HG Capital’s Murley said: “It’s progress.”
However, he added: “There is a huge scale-up issue that needs to be addressed. The government’s targets are not achievable.”
Tide turns for wave power
From The Sunday Times
August 3, 2008
Ocean Power Technologies believes that it has found the next big thing in carbon-neutral energy
Ben Laurance
WIND POWER faces difficult obstacles, but its supporters can at least point to wind farms already in operation. By contrast, tidal power, often touted as an environmentally friendly alternative, has struggled.
A firm quoted on London’s Alternative Investment Market believes it is on to the next big thing in carbon-neutral energy — wave power.
Ocean Power Technologies (OPT) is one of four companies whose hardware is to be tried out in a wave-power project off the coast of Cornwall. Electricity should start coming ashore in 2010.
Over several decades, a range of technologies have been used to capture wave power. The Cornwall project, called Wavehub, will experiment with four approaches.
One involves a floating platform in which waves push air through turbines. A second exploits tidal flow rather than waves. The third system — from Scotland’s Pelamis — uses a series of floating tubes joined by hinges: as they move relative to one another, power is generated.
Then there is OPT’s system. It consists of a steel column that sits vertically in the water. A collar like a huge doughnut moves up and down the column as waves pass. That movement drives a generator and electricity is then taken ashore.
OPT is also supplying one of its buoys for a trial off Orkney. The hardware should be in place in a year.
Until now, the cost of the hardware has made wave power uneconomic: it has struggled to compete with wind generation, let alone power stations burning fossil fuels such as coal and gas.
However, OPT insists that if it can start volume production of large versions of its buoys, the cost of producing electricity could be lower than with wind turbines.
There are three practical problems. First, the sea is a hostile environment for anything involving moving parts, and in particular for electrical equipment. OPT reckons that the simplicity of the design of its generating buoys and the effectiveness of seals to keep water out should ensure reliability. “Our first experimental unit went into the sea in 1997,” said company founder George Taylor. “Two of our units have operated for more than a year.”
The second challenge is that waves are erratic — they are either too small to generate power or so large that they threaten to destroy the equipment. The OPT system deals with this by shutting down when waves become too big. One of the company’s buoys off the coast of New Jersey survived Hurricane Wilma in 2005.
The third issue is the rhythm of waves: a basic power-generating buoy has a natural frequency and will work most effectively only when waves arrive at that frequency. OPT’s buoy has a device that can detect within a split second the size and speed of waves and adjust itself to make the most of the available energy.
Wave power has some advantages over other types of carbon-neutral electricity generation. A wave farm covering 300 square miles of the Pacific could supply electricity for all of California’s homes. To do the same with wind farms would require 15 times as much space.
Furthermore, wave-power generators can produce electricity 30% to 45% of the time — when waves are neither too big nor too small. Solar and wind generators manage to produce useable amounts of power only between 10% and 35% of the time.
The first test of the commercial viability of OPT’s system will come this month when one of the company’s buoys will go into the sea off Spain, where it will supply electricity as part of a project headed by Iberdrola.
And then there are the economics of the whole idea: do they really stack up?
OPT estimates that electricity from large wave-power buoys should be cheaper than that from solar panels or wind turbines. And it should at least be within striking distance of the cost of generation by natural gas and coal-fired plants.
There is room for dispute, though, over the true cost of producing electricity from different sources. “This is an issue of great controversy,” said Jim Skea, at the UK Energy Research Centre.
The future cost of coal and gas for plants using fossil fuels can only be guessed at. Also, “wind turbines are much more expensive than they were just two or three years ago”, said Skea. This reflects the simple fact that demand has vastly outstripped supply. Estimates of the total cost of electricity from nuclear power vary enormously according to what cost is put on waste disposal and the decommissioning of old power stations.
And crucially, the economics of different types of plant depend on what discount rate is applied over the lifetime of a project. With coal and gas, most of the cost is in buying the raw materials to burn. But with wind, solar and wave power plants, nearly all the cost is incurred upfront: once in place, the only significant cost is maintenance — wind and waves are free.
Will wave power make a big short-term contribution to electricity generation? No. “And there are bound to be problems as we develop prototypes and learn from our mistakes,” said OPT’s Taylor. “But long term this looks like a viable technology.”
August 3, 2008
Ocean Power Technologies believes that it has found the next big thing in carbon-neutral energy
Ben Laurance
WIND POWER faces difficult obstacles, but its supporters can at least point to wind farms already in operation. By contrast, tidal power, often touted as an environmentally friendly alternative, has struggled.
A firm quoted on London’s Alternative Investment Market believes it is on to the next big thing in carbon-neutral energy — wave power.
Ocean Power Technologies (OPT) is one of four companies whose hardware is to be tried out in a wave-power project off the coast of Cornwall. Electricity should start coming ashore in 2010.
Over several decades, a range of technologies have been used to capture wave power. The Cornwall project, called Wavehub, will experiment with four approaches.
One involves a floating platform in which waves push air through turbines. A second exploits tidal flow rather than waves. The third system — from Scotland’s Pelamis — uses a series of floating tubes joined by hinges: as they move relative to one another, power is generated.
Then there is OPT’s system. It consists of a steel column that sits vertically in the water. A collar like a huge doughnut moves up and down the column as waves pass. That movement drives a generator and electricity is then taken ashore.
OPT is also supplying one of its buoys for a trial off Orkney. The hardware should be in place in a year.
Until now, the cost of the hardware has made wave power uneconomic: it has struggled to compete with wind generation, let alone power stations burning fossil fuels such as coal and gas.
However, OPT insists that if it can start volume production of large versions of its buoys, the cost of producing electricity could be lower than with wind turbines.
There are three practical problems. First, the sea is a hostile environment for anything involving moving parts, and in particular for electrical equipment. OPT reckons that the simplicity of the design of its generating buoys and the effectiveness of seals to keep water out should ensure reliability. “Our first experimental unit went into the sea in 1997,” said company founder George Taylor. “Two of our units have operated for more than a year.”
The second challenge is that waves are erratic — they are either too small to generate power or so large that they threaten to destroy the equipment. The OPT system deals with this by shutting down when waves become too big. One of the company’s buoys off the coast of New Jersey survived Hurricane Wilma in 2005.
The third issue is the rhythm of waves: a basic power-generating buoy has a natural frequency and will work most effectively only when waves arrive at that frequency. OPT’s buoy has a device that can detect within a split second the size and speed of waves and adjust itself to make the most of the available energy.
Wave power has some advantages over other types of carbon-neutral electricity generation. A wave farm covering 300 square miles of the Pacific could supply electricity for all of California’s homes. To do the same with wind farms would require 15 times as much space.
Furthermore, wave-power generators can produce electricity 30% to 45% of the time — when waves are neither too big nor too small. Solar and wind generators manage to produce useable amounts of power only between 10% and 35% of the time.
The first test of the commercial viability of OPT’s system will come this month when one of the company’s buoys will go into the sea off Spain, where it will supply electricity as part of a project headed by Iberdrola.
And then there are the economics of the whole idea: do they really stack up?
OPT estimates that electricity from large wave-power buoys should be cheaper than that from solar panels or wind turbines. And it should at least be within striking distance of the cost of generation by natural gas and coal-fired plants.
There is room for dispute, though, over the true cost of producing electricity from different sources. “This is an issue of great controversy,” said Jim Skea, at the UK Energy Research Centre.
The future cost of coal and gas for plants using fossil fuels can only be guessed at. Also, “wind turbines are much more expensive than they were just two or three years ago”, said Skea. This reflects the simple fact that demand has vastly outstripped supply. Estimates of the total cost of electricity from nuclear power vary enormously according to what cost is put on waste disposal and the decommissioning of old power stations.
And crucially, the economics of different types of plant depend on what discount rate is applied over the lifetime of a project. With coal and gas, most of the cost is in buying the raw materials to burn. But with wind, solar and wave power plants, nearly all the cost is incurred upfront: once in place, the only significant cost is maintenance — wind and waves are free.
Will wave power make a big short-term contribution to electricity generation? No. “And there are bound to be problems as we develop prototypes and learn from our mistakes,” said OPT’s Taylor. “But long term this looks like a viable technology.”
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