Sunday, 13 September 2009

Britain falls behind in the race to win low-carbon trade

Tricia Holly Davis
Green business deals worth £300m between British and Chinese companies were unveiled in the People’s Republic last week by Lord Mandelson, the business secretary.
They were meant to illustrate Britain’s leading role in the £2 trillion global market for low-carbon goods and services, yet new figures reveal that we are being left behind by China and America.
Britain’s share of the global market for low-carbon products and services is only 3.5%, or about £63 billion, according to research from Mandelson’s department. America is the single biggest player with a 20.6% share, worth £377 billion, followed by China with 13.5%.
Thanks to huge domestic subsidy programmes — especially in China — the gap is widening. Price Waterhouse Coopers (PWC), the accountant, said the market in the People’s Republic could grow to £600 billion a year, or 15% of forecast GDP, by 2013.
Jon Williams, a partner at PWC, said: “If we are going to catch up with China — and other nations such as America and India — we need to create a manufacturing base and prevent skilled workers from migrating abroad or to other industries.”
Over the past decade the opposite has happened. Britain has seen a 22% decline in the number of chartered engineers, a two-thirds decline in incorporated engineers and a 50% drop in engineering technicians. India is now the largest manufacturer of wind turbines while Britain’s only big turbine parts factory, owned by Vestas on the Isle of Wight, closed recently.
The UK’s poor standing will be a blow to Gordon Brown, who has touted the development of low-carbon industries as an important element of the recovery from recession.
The advance of America, China and India is not surprising given that they have big populations and are heavy polluters. China, home to nearly a fifth of the world’s people, builds more power plants each year than the total operating in Britain.
The fear, however, is that the British government is not doing enough to help companies build capacity to increase or even maintain our small slice of the pie.
In China the government is planning an unprecedented package worth £263 billion over the next few years focused on renewable energy alone. This comes on top of a £350 billion stimulus package aimed at combating the recession — a third of that pot was also earmarked for green investment. America, meanwhile, set aside a significant chunk of its $787 billion (£470 billion) stimulus package for the same purpose. By comparison the UK devoted about 15% of its comparatively tiny stimulus budget to low-carbon industries.
It’s an important point. Every 0.1% added to Britain’s global market share of green goods equates to growth of £3 billion for the domestic economy. Analysts say this needs to double if the country is to capitalise fully on the low-carbon economy. “The issue for the UK is not whether we can get in the low-carbon race but whether we can stay in the race,” said Rhian Kelly, head of climate change at the CBI.
Green Idea
Want to go on safari but feel bad about the carbon you would generate getting to Africa? The Uganda Wildlife Authority has the answer. Later this month it will launch a website to allow online gorilla tracking. For a minimum $1 donation, users can “befriend a gorilla” through sites like Twitter and Facebook and track them online. Find out how at

Sailing into a greener future

A revolutionary green sponsorship deal will be unveiled this week by the British team competing to win the America’s Cup sailing competition.
Teamorigin, run by the entrepreneur Sir Keith Mills, has given away the prime advertising space on the sails of its boat to the Carbon Trust, a not-for-profit green adviser. Together they are launching a new environmental campaign named The Race for Change — a platform to attract other corporate sponsors. The team is captained by Ben Ainslie, the Olympic gold medallist.
The deal flies in the face of convention — most teams in the yacht race are bankrolled by billionaire businessmen and international companies. The Carbon Trust is not paying a penny for its involvement.
Mills, who has been funding the team’s £15m-a-year running costs from his own pocket, believes the team’s focus on the green agenda will help attract up to four corporate backers to the project, raising £75m of funding.
“The America’s Cup is a perfect vehicle to carry the message of climate change,” said Mills. “In the current downturn, big companies are looking to get a lot more from the events and the sports teams they choose to sponsor. It doesn’t cut it any more if you just ask for money.
“A lot of companies are spending a lot of money on environmental projects. We are building a whole package through this deal with the Carbon Trust that will allow us to harness the power of sport with the environmental debate and help us all work towards lowering our carbon footprint.”
A series of collaborative projects is planned. Mills has held tentative talks with a number of engine manufacturers about the possibility of designing the world’s first green marine engine that will run on biofuels or electricity.
Ultimately, the Race for Change platform could lead to the creation of a new British eco-town.
“Britain invented the America’s Cup,” said Mills, “yet it’s the only big sporting trophy we’ve never won. One of the great things about the America’s Cup is that the winner gets to host the next event. We would love to be able to do that, and to use it as an opportunity to redevelop a British coastal town — and do it in an environmentally-conscious way.”
The Carbon Trust will also ensure that Teamorigin limits its impact on the environment. Tom Delay, the trust’s chief executive, said: “It would be wrong for us to commit any of our money to a normal sponsorship deal — that would not be an appropriate use of our funds. Although we are not paying any money, there is a lot we are bringing to this project and we look forward to working on some interesting projects with whoever signs up.”

Jetting off to la-la land on carbon cuts

Charles Clover
Flying makes hypocrites of us all. Franny Armstrong, inventor of the 10:10 campaign to cut our emissions by 10% in 2010, popped up last week in New York for the premiere of the government’s favourite climate change film, The Age of Stupid, and was duly asked by Jeremy Paxman whether she was setting much of an example.
And as I was starting this article, a friend rang to say “for goodness sake, book that flight”. We are off to Monaco for the premiere of our environmental film, The End of the Line. I struggled with rail timetables, realised it would take nearly two days, there and back, then Googled BA and offset the flight. I’ll get those ferry timetables out before the Copenhagen climate conference in December — honest.
We have to concede that flying has become, for now, an inextricable part of modern life. But does that also mean we have to accept that flying on business trips and cheap holidays will go on expanding at an exponential rate until the middle of this century as the government says it will? That was the question raised again last week by the committee on climate change, the other body chaired by the ubiquitous Lord Turner, who, as the Financial Services Authority chief, raised eyebrows by suggesting the City should do less but do it rather better.
His suggestion to the airlines is, in effect, identical — his committee calls for a “new and ambitious policy on aviation”. Being a government committee, it isn’t quite so blunt as to say (though it is true) that the government’s aviation policy — which involves a new runway at Heathrow and one at Stansted — doesn’t make much logical sense, given the climate change negotiations leading up to Copenhagen and the passing of a Climate Change Act setting out the path to statutory 80% reductions in Britain’s carbon emissions by 2050. But it does point out that to allow the aviation industry to use up almost a quarter of the country’s carbon ration in 2050 would mean cuts of 90% in all other parts of the economy.
Now 90% is a lot. Can you honestly see houses becoming so carbon-efficient over the next 40 years that they need only 10% of the fuel to heat them that they use now? I can’t. Can cars, lorries, trains and boats become so efficient that they need only the biofuel equivalent of a bag of oats to bring our food across the world and to take us to work?
Common sense would conclude that there is a hierarchy of needs: food and shelter are higher up than business trips and holidays. By taking government policy — hell-for-leather expansion of aviation — at face value, the committee has shown up its absurdity.
Take a closer look: as things stand, under the ingenious formula devised by officials to bring Heathrow’s expansion into line with government climate change commitments, aviation emissions will somehow return to 2005 levels by 2050. Apparently this is achievable through more efficient aircraft and alternative fuels. The words trip off the tongue, but what do they mean?
Richard Branson recently flew a 747 from London to Amsterdam using 5% biofuel. This required oil from the equivalent of 150,000 coconuts. Had the flight been run entirely on biofuel, it would have consumed the equivalent of 3m coconuts, the annual production of an entire South Sea archipelago. It is far from clear that the world can afford to maintain the proposed levels of aviation in 2050 and to feed itself.
And what the world thinks is relevant. We Brits are aware we have got used to flying to an unprecedented degree over the past generation. But are we all aware we’re the ones who fly the most?
British aviation emissions, per adult, are world-beaters. Second is the Republic of Ireland, followed by the United States. Defending our present behaviour to developing countries threatened by climate change is difficult enough. Just try defending our projected behaviour.
When you stack it up, the aviation industry is in a much bigger fix than its victory in the Heathrow third runway battle would suggest. The price of oil has crept back up from $35 a barrel to about $71 today and will almost certainly peak if the economy picks up. Meanwhile, aviation’s unhealthy closeness to government — symbolised by Brian Wilson, a former Labour energy minister, heading Flying Matters, the campaign for flying funded by the airlines and BAA — is unlikely to be repeated under the Tories, who will scrap new runways at Stansted or Heathrow. You would have thought an alternative business model to selling more cheap flights was long overdue.
I suspect the British public is a lot shrewder than its politicians give it credit for. We want to fly, but we also don’t want to feel hypocritical about flying. We want to pay our environmental costs. We would, I reckon, be happy with a cap on emissions that would make flying more expensive — and therefore less desirable — as the economy improved. That happens to be what the committee on climate change is suggesting. It is a fair bet, when the committee publishes its full report later this year, that it will conclude that the opportunities for aviation to expand are far more limited than the government has assumed until now.

Open Minds: Turning green into gold

The path to riches — and happiness — is a bustling new eco-economy

If a foreigner reviewed all the statements made by our recent government leaders on the environmental crisis, they would assume we are at the very forefront of action. “Building a low-carbon global economy,” Gordon Brown said, demands a “worldwide commitment” on a comparable financial scale to the post-war Marshall plan. Tony Blair described climate change as “the greatest long-term threat to our planet”, warning that inaction would be “literally disastrous”.
Yet despite both presiding over this country for over a decade, we are neither less polluting, nor more prepared for environmental change. Therein lies a problem. The gulf between what our leaders want us to believe they are doing and what they are actually doing is huge. But, whether they like it or not, we will see dramatic change, if only because resources will grow scarcer and commodity prices will soar. By refusing to properly engage, Britain is taking an unnecessary risk and missing an extraordinary opportunity.
We will emerge from the current recession, and, when we do, we can choose something different. Instead of re-creating conditions that delivered the economic crisis and systematically trashed our environment, we can build an economy that’s cleaner, greener and much less wasteful, where valuable things are valued, pollution has a cost and green choices — currently available only to the committed or wealthy — become mainstream.
This transition is already happening. In the US, President Obama has promised to spend $150 billion over 10 years on green investment, creating 5m “green collar” jobs. South Korea, Japan and Spain are making similar moves, and in the private sector blue-chip companies have accepted that disregarding the environment is increasingly a financial risk. It’s not just about preparing for the worst, or doing “the right thing”. The transition itself will open windows of unprecedented opportunity. Who can doubt that, in the years to come, clean technology success stories will dominate The Sunday Times Rich list?
In most sectors, we can already see the alternatives, and they work: microgeneration of energy in Germany; combined heat and power plants in Copenhagen; zero-waste policies in Japan and New Zealand; regeneration of fish stocks in Central America; our own Eurostar. In the future, we will see “smart meters” that save money by letting customers know when electricity is cheaper in the day. These meters will be part of a “smart grid” to intelligently co-ordinate how we use new renewable power sources, to regulate supply and demand, and to help reduce greenhouse emissions. If we took the best of today in every sector and made it the norm tomorrow, we’d be halfway or further to our goal.
There has been some progress in Britain, such as ambitious targets to reduce CO2 emissions, but little to inspire excitement in those paying attention. They are set so far into the distance that few of today’s politicians will be held responsible when they’re missed, and the mechanisms for realising those targets are yet to be identified. Unlike plans to treble airport capacity and build more polluting coal plants.
More than that, the government’s purely carbon-related approach does little to address our rapid shift from an era of abundance towards one of scarcity — a situation caused by a combination of huge population growth, insatiable human appetite for consumption, and an ever-shrinking resource base. Rational people know that, without a big shift, we are going to hit a wall. Yet that terrifying truth has almost no bearing on actual policy decisions. Why?
No politician wants to present voters with a choice between the economy and the environment. But inasmuch as it’s a choice at all, it’s a false one, because if we’re to create a sustainable, steady economy, we will have to find a way to marry the two. Sceptics worry about money but confuse cost with investment. Energy efficiency is already cost-effective. Nor do we need “new” money. We need to change the direction in which today’s money flows.
If pollution and waste are properly costed, clean companies will have the edge and polluting companies will be left behind. By shifting taxes, removing perverse subsidies and creating clear signals, whole sectors will flip. Car companies will make cars that cost less to run, manufacturers will make products designed to last, jobs will be created, and the market — so long an engine of destruction — will be reconciled with the environment.
When trust in politicians is at an all-time low, we need to see that a green initiative is just that, not merely a stealth tax dressed in green clothes. Some things will necessarily become more expensive, but the money raised must be used to bring down the cost of alternatives. There shouldn’t be retrospective “green taxes”, punishing people for decisions they have already made.
We won’t get the leadership we need unless we send our politicians a clear message. For doing the right thing, they will be rewarded. For doing the wrong thing, they will be sacked. It’s up to them to act, but we must make them act.
Zac Goldsmith’s The Constant Economy: How to Create a Stable Society (Atlantic, £16.99) is out now

Carbon-trading market hit by UN suspension of clean-energy auditor

Danny Fortson, Georgia Warren

The legitimacy of the $100 billion (£60 billion) carbon-trading market has been called into question after the world’s largest auditor of clean-energy projects was suspended by United Nations inspectors.
SGS UK had its accreditation suspended last week after it was unable to prove its staff had properly vetted projects that were then approved for the carbon-trading scheme, or even that they were qualified to do so.
The episode will be embarrassing for European lawmakers in the run-up to the global climate summit in Copenhagen, where they will attempt to lure big polluters such as America and China into a binding agreement to replace the Kyoto protocol. SGS is the second such company to be suspended – Norway’s DNV was penalised last November for similar infractions.
The EU’s carbon-trading system, which puts a price on pollution through carbon permits that can be bought and sold, is the key element in Europe’s fight against climate change.
function slideshowPopUp(url)
return false;
Related Links
Britain falls behind in the race to win low-carbon trade
Climate change talks may fail, warns Miliband
About a fifth of the $100 billion of credits traded annually come from projects funded under the Clean Development Mechanism (CDM). The heavily criticised programme allows industrialised countries to offset their pollution by buying “certified emission reductions credits” generated by low-car-bon schemes in the developing world. China and India are the biggest generators of the credits: more than 900 projects are now running, producing billions of credits, with thousands more in the pipeline.
Critics say the system is not sufficiently policed and allows western polluters to buy their way out of more costly carbon-cutting measures.
All such schemes must first be approved by organisations such as SGS. DNV was the single biggest auditor until it was suspended last year, when much of its workload was shifted to SGS, which was simply unable to cope.
Simon Shaw, chairman of EEA Fund Management, a backer of emission-reduction projects and an investor in Climate Exchange, the carbon-trading platform, said: “There was obviously a lack of resources. We knew this was coming.”
UN inspectors said they found six irregularities in a recent spot check. The firm has now rectified these, but remains suspended until the UN verifies sufficient changes have been made. SGS could not be reached for comment.
Lawmakers are expected to reform the CDM in Copenhagen in December. A research firm that tracks trends in clean energy and carbon trading has been put up for sale with a £30m-£40m price tag. New Energy Finance was set up in 2004 by Michael Liebre-ich, a former McKinsey consultant who owns a key stake.
Its backers include former Reed Elsevier boss Sir Crispin Davis and Mike Luckwell, a one-time investor in Hit Entertainment. The corporate finance firm Quayle Munro was brought in to advise on options after takeover approaches were received.
Energy and Environment, page 13

Next target is your water footprint

Marie Woolf, Whitehall Editor
ENVIRONMENTALLY conscious consumers already fret about how to cut their carbon emissions. Now Whitehall officials plan to urge the public to reduce the amount of water they use because of worries about the West sucking up supplies from some of the world’s driest countries.
The government has commissioned research to audit everyday items from a morning cup of coffee to a bag of carrots according to the volume of water used in their production.
Eventually products could be labelled with this number.
The Department for Environment, Food and Rural Affairs (Defra), which has set up a water footprint steering group, wants to broaden public awareness of climate change to include water supplies.
Defra believes consumption could be cut if shoppers were aware of how much is used to produce common items. A takeaway latte, according to figures already gathered by officials, requires 200 litres (44 gallons) to grow the coffee beans, transport them and serve the coffee in the cup. It takes another 2.5 litres to make the plastic lid for a takeaway latte.
A cotton T-shirt with a slogan on the front uses an estimated 4,000 litres.
The new research will assess items both for how much water they use and for the impact on the country where they are produced. This could mean, for example, that a product imported from a dry country would be rated worse than one from a place where water was plentiful.
In Morocco, for example, irrigation for exported products has lowered the water table so much it could reduce future supplies.
Beans grown in Kenya, where supplies are short, take up water that could otherwise have been used for local food production.
An internal Defra report says world water security is a big concern for the future and could one day affect Britain’s food supplies.
“There is already sufficient evidence for water-scarce regions (Spain, North Africa, South Africa, Australia) to suggest current production levels for export of many commodities are unsustainable,” says the report.
Rob Lillywhite, an environmental scientist at Warwick University who has been commissioned by the government to conduct the two-year study, said: “Labelling products would be a useful way of informing consumers of the water used in production. Defra are taking this issue very seriously.”
The government is also looking at water security in Britain. Southeast England is so densely populated that it has less water per person than Morocco, Sudan or Syria.

Bagging a green job

Employees of the future are likely to assess companies’ environmental credentials before deciding where to apply

School-leavers and the so-called Generation Y (the under-30s) are starting to look hard at a potential employer’s track record for protecting the environment, promoting sustainability and being a good corporate “citizen” when it comes to deciding whether or not to work for them. Perhaps it’s because they feel they are the ones who are going to have to clear up the mess left by older generations.
A study by Berkhamsted’s Ashridge Business School in June highlighted green issues and a commitment to charitable or community activities as being key concerns for Generation Y. Earlier this year, too, Business in the Community, a coalition with 800 members that encourages corporate responsibility, urged employers to do more to harness and attract “green talent”. Employers need people with the right skills, often in areas such as science, technology, engineering and maths, to help them become part of the “low carbon economy” championed by political leaders as the way forward for Britain, it argued in a report.
Growing numbers of companies, large and small, are promoting the environmental and ethical credentials of their “employer brand” as a vital way of engaging and communicating with their future workforce. “The green and sustainability angle is a very important part of making many employers more attractive,” says Neela Bettridge, director at corporate-responsibility consultancy Article 13. “But there also has to be transparency. Young people are very savvy and it most definitely mustn’t just be a policy or a slogan — it must be something you believe in.”
Terry Bates is education manager at United Utilities’ Worthington Lakes environmental centre near Wigan. The company has been running the centre, along with five others in the northwest, for two decades, educating about 20,000 children a year about water and energy conservation.
“We are aware of the need to educate future customers. We are a water utility and these days it is essential to look at water conservation,” says Bates. “It is a long-term investment, not a quick fix. Youngsters who come to do work experience with us at 14 will often admit they came to one of our centres when they were seven or eight.”
Even where the environment is not the primary focus, sustainability will often be woven into the messages employers send out to the next generation, says Richard Hamer, director of education partnerships at aerospace giant BAE Systems. Each year, the company runs a drama-based roadshow aimed at 9- to 13-year-olds, which will be kicking off tomorrow for a seven-week autumn tour around 56 schools.
“For us it is not so much green issues as promoting science and engineering as a career, but green issues do inevitably come into it,” explains Hamer. “For example, there is normally a theme around recycling and husbandry of the world’s resources, as well as trying to engage young people — girls in particular — and change their perceptions of what engineering is about.”
Energy firm Npower each year runs a schools competition, Green SOS, as part of its Climate Cops programme, which helps schools to become more sustainable and encourages youngsters to get more involved in green activities.
Teams of children from 10 schools are selected to organise, run and promote projects and campaigns within their local communities. The teams spend a day being trained in London on skills such as dealing with the media, participate in outdoor activities in the Lake District and work with Npower volunteers in their schools.
Last year’s winner was Norwich’s Hellesdon High School, which ran a campaign lobbying local shopkeepers to ban plastic bags, eventually getting 23 to commit to it, as well as designing and selling an eco-friendly jute bag. All 10 pupils on the team won a laptop, plus £20,000 for the school, which they decided to spend on solar water heating, explains learning mentor Clare Lovick.
Raphael Barnett-Ward, 13, and Lauren Barrett-Dye, 14, were members of the winning team. “When we approached shops, some of them were not friendly, but most were. It was also quite scary doing things like radio interviews, but overall it was interesting,” says Barnett-Ward.
“The training beforehand was a lot of fun, especially camping in the Lake District. We had to row to the campsite and then all work together in the camp. It was educational at the same time,” adds Barrett-Dye. “When you do something like this, you feel like you are really doing something worthwhile. My mum and dad changed over energy company as a result. I would like to do something with the environment for the rest of my life.”
Find out more The campaign organisation Make Your Mark supports young entrepreneurs with business advice and information on mentoring Federation of Small Businesses website includes an online directory of its members, which young people can target for work experience and employment The Trade Association Forum, an umbrella organisation for Britain’s many trade bodies that can advise on working with SMEs An entertaining online journal featuring information and opinion on small businesses as well as recruitment advice The Civil Service represents 23 Whitehall departments and offers career options for undergraduates and graduates plus work experience in areas from overseas aid to the environment The Public Sector People Managers’ Association has a wealth of employment contacts and useful information on working in the public sector, with regional contacts The Improvement and Development Agency for local government (IDeA) has a brief to ensure councils share good practice. Online resources include networking forums providing insight into local government careers The Confederation of British Industry, which lobbies on behalf of business, monitors education and skills in the workforce and has information for employers on apprenticeships The latest on all things green from the Department for Environment, Food and Rural Affairs, including in-depth information on the farming and fishing industries