Carbon Trust - the big questions: the best way forward?

Sir John Parker, chairman of Anglo American and National Grid, tackles some of the burning issues regarding carbon reduction at home and abroad.

Andrew CavePublished: 3:26PM GMT 12 Nov 2009
If you were Ed Miliband, what further measures would you take to encourage businesses to act on carbon reduction now?
The Government needs to press Copenhagen for a strong signal on the carbon price and to ensure that the European trading system for carbon really is effective, because that is vital.

Secondly, I would be pressing for targets to be set globally per country to achieve the reductions that will keep our temperature increase between now and 2050 at no more than two degrees. Those targets will clearly vary by country, but there has got to be a route map. It has taken some time but, conceptually, we now know what has to be done. We need to ensure that planning processes, the carbon price and regulation are really aligned with those objectives.
Do you think the recession is having a positive or negative impact on business efforts to cut carbon?
I think the recession has inevitably forced many companies to manage their businesses for cash. Investments were slashed in the shockwaves of autumn 2008, some order books went into freefall and there was great uncertainty in the market about the ability of companies to raise finance. The bond market had dried up and the banks, for a period, were not lending — even to well-rated corporates.
Inevitably, that has taken the focus off investments in energy savings in some companies. But others who are a bit more muscular, financially speaking, were able to continue investing in energy saving and examining the merits of carbon capture and storage.
Are there any areas where you would welcome greater government action?
An important thing we have lobbied for is to simplify the planning around decisions on vital infrastructure. This is in place now and it must be kept in place regardless of which party is in power next time around.
We need to get new power stations built and reinforce distribution to the right places. We need to connect up the new streams of renewable energy production and also have to deal with the coal-fired power stations: that is where the introduction of carbon capture and storage is going to be vital for the coal industry. Coal is very much part of our commodity production at Anglo American. We want to play our part in ensuring that we come up with the right technology.
In the UK, carbon capture and storage will be vital to maintaining a sizeable coal burn. If you look at China and India, their demand for thermal coal is going to be quite significant, but their contribution to carbon reduction will only be achieved if we can technically solve the capture and storage issue.
The Government has set aside money to create pilots in carbon capture and storage and that has been a very good move. You have to keep moving: you need bigger nuclear power stations and efforts to achieve a clean-coal society.
What does the low-carbon economy mean to you, personally? What is your own vision of a low-carbon world?
We have done a lot of modelling for the UK government on how a low-carbon society would look from a power company point of view. For example, the introduction of electric cars between now and 2050 will have an important impact in helping achieve the 80pc reduction, but charging them will have a huge impact on power requirements — so what will that look like? We’re a society where you can’t just charge up at night.
One has also got to look at trying to model the implications for electricity transmission and distribution networks. There will be a change in the electricity production mix. At present, the UK gets about 30pc of its power from coal, just under 20pc from nuclear energy, 45pc from gas and just 5pc from renewables. That mix will change, but the lead time to get the new nuclear is on stream and the Government has made important decisions that I don’t think the market itself would have come up with.
If you had one message to fellow business leaders on building a lowcarbon business, what would it be?
Start with energy efficiency; I think it’s that simple. There’s a danger that you can get too esoteric about this. If you take the mine-head power stations that we have at Anglo American, they capture methane which would otherwise escape - but we’re also capturing a free fuel to create the power. So, it’s sustainability and energy, it’s energy efficiency, and it’s reduction of carbon capture. It’s a lovely three-way hit, but it’s driven by energy sustainability in its wider sense.