Clean energy is a smart move for British exports

Malcolm crop 2

Malcolm Brinded CBE FEI, President of the Energy Institute

The Government’s support for clean energy technology is right for the planet and for Britain’s future as a global trading nation, says Energy Institute President Malcolm Brinded CBE FEI.

Climate change is a threat. It threatens the delicate balance of the Earth’s ecosystems and the plants and animals that inhabit them. And according to recent polling across 38 countries it ranks alongside ISIS as the biggest threat to security.

But can a threat also be opportunity? For UK ministers seeking to marry the need to meet ambitious carbon targets with maintaining Britain’s global economic standing post Brexit, there is certainly potential.

This was the rationale behind the Smart Systems and Flexibility Plan and the Faraday Challenge announced recently by Greg Clark, “to put UK businesses in a leading position to export smart energy technology and services to the rest of the world.”

It was music to the ears of an industry that has been waiting for a fresh sense of leadership from ministers.

Brexit and the snap election have left their mark. Clean energy investment plunged in the first quarter of 2017 to around $1bn, the lowest since 2010. Three quarters of professionals surveyed for the Energy Institute’s Energy Barometer agree with the Committee on Climate Change that meeting our 2030 carbon target will prove challenging.

All eyes are therefore on the Government’s Clean Growth Plan and Industrial Strategy and, if July’s announcements were the preamble, I am encouraged. Energy professionals rank smart grids and energy storage as the most important changes needed to develop our energy system.

Ministers are right not to be caught napping. New technologies have too often been viewed with suspicion, rather than as an opportunity to build a more efficient energy system. Smart grids, storage and interconnection could save consumers up to £8bn a year by 2030.

But this isn’t just important for our domestic goals. It’s also central to maintaining the UK’s place on the world stage through applying our ingenuity to the challenges posed globally by climate change and the pressing need for improved access to energy in developing nations – where lack of affordable and reliable energy remains a major barrier to economic and social development.

The UK has already accumulated considerable exportable expertise. But we need to be cannier about commercialisation and acquiring intellectual property if we are to grab a share of huge potential global markets. It’s estimated small scale battery storage alone will be worth $250bn by 2040.

Clean energy research, innovation and early stage technology piloting are vital. If smaller British innovators are to succeed, government funding needs to flow more quickly, calculated risk-taking is needed in backing early stage innovators and the rules of the game need to be simpler and more predictable.

The prospects seem good for the Faraday Challenge, which will I hope break the mould of recent stalled government competitions.

If we get this and other initiatives right, far from a retreat from the international stage, we could see great British invented, designed, manufactured, exported and project-managed technology right at the heart of the global green technology boom.

This blog post first appeared in Politics First on 15 September 2017

Ministers must act to attract energy investment

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Brexit uncertainty is scaring off investors, and with the UK set to lose £2.5bn in European Investment Bank loans and EU funds, we need long-term policy to boost confidence.

With Brexit eclipsing all other debates, plus the hiatus caused by the snap general election, climate and energy policy has largely been on hold for more than a year. This political uncertainty is contributing to a risky investment climate in energy and it’s affecting immature low-carbon technologies most acutely.

I hear this message frequently from senior figures across the industry, and it’s reflected in the recently published Energy Barometer survey of Energy Institute (El) members, who rank Brexit-related uncertainty among the five most pressing concerns.

Due to its complexity, investment lead times and the potential loss of EU funds, energy is in critical need of an effective, clear and far-sighted government strategy.

So what’s our prescription? First, the transposition of EU energy legislation into UK policy post-Brexit must be a top priority for the government. Retaining energy-related EU directives in UK law across the system, from air quality and emissions controls, to regulations on energy efficiency and renewable energy is a clear preference. Only in the case of state aid rules would most El members prefer to change or abandon the legislation.

Second, we need continued cooperation and resource sharing with European counterparts. Britain may be an island, but even post-Brexit. it would be a mistake to treat the energy system in that way. While most of our members surveyed view the UK as an appropriate level for policy decisions in the areas of energy security, energy efficiency, research and innovation, and energy markets, a large minority of members feel that the EU is an appropriate level for policymaking in these areas. Perhaps the
best example of this support for continued cooperation with the EU is our concern about the planned exit from the EU atomic energy regulator, Euratom. which could negatively impact the cost and delivery of new nuclear projects as well as the supply chain in the UK.

Third, we need to see government efforts to ensure a sufficient supply of workers to the industry, prioritising engineers as well as qualified and unskilled manual workers. Nearly 60% of Barometer respondents expect a fall in the number of skilled workers, and more than 40% foresee a drop in qualification levels if free movement of labour is curtailed after Brexit. Mitigating measures should include training to facilitate transition from other industries, providing apprenticeships and vocational courses, encouraging closer cooperation between academia and industry, and allowing immigration of skilled labour.

Finally, clear and long-term government policy that boosts investor confidence in specific technologies and the system as a whole is critical. Bloomberg New Energy Finance reports investment in clean energy plunging in the first quarter of 2017 to around $lbn, the lowest since 2010. It was encouraging to see the recent publication of the government’s smart systems and flexibility plan, but ministers still need to press play in other key policy areas and. in particular, deliver on the much-delayed clean growth plan and the evolving industrial strategy.

Clear and long-term state policy that boosts investment confidence is needed as the UK will lose EU funds and European Investment Bank loans, which account for around £2.5bn of the UK’s energy-related infrastructure, climate-change mitigation and R&D funding per year.

Replacing EU funding will be a challenge if domestic spending constraints are maintained, and should be a central focus for the government’s industrial strategy. Support for energy infrastructure and R&D should flow from the National Productivity Investment Fund, alongside indirect incentives such as tax breaks for R&D and support for academia-industry collaboration.

Getting both energy strategy and the post-Brexit relationship with the EU right will determine how we successfully deliver a secure, clean and affordable energy system, vital to sustaining our economy and society.

This blog first appeared on ENDS Report online on 11 August 2017

Women on boards is a business imperative

Alex Chisholm

Alex Chisholm, Permanent Secretary, BEIS

As POWERful Women turns three, the man in charge of the department responsible for energy commits to reaching parity between men and women within his senior ranks by 2025 and calls for more change in the sector’s boardrooms.

When I first joined the civil service over 25 years ago my boss was a woman, her boss was a woman, and her boss’s boss was a woman too. In the early 1990s, this was unusual even in the civil service. In the present day, would anyone find that notable? In the modern civil service, probably not. But in the energy sector? Yes, even today. Very unusual.

Since government and business launched the Women on Boards initiative in 2011, the percentage of female directors in the FTSE 100 has more than doubled from 12.5% to 27.3%.

Unfortunately, research undertaken by POWERful Women and PwC shows us that very little has changed in the UK energy sector, which continues to lag behind at 9%.

PWCs ‘Igniting Change 2’ report shows us that only 6% of UK energy firms sampled had female executive board members (it was previously 5%), which is a fifth of POWERful Women’s executive board level target of 30% by 2030. The proportion of female board executives across key energy sectors also remained unchanged (nuclear at 8%, oil and gas at 7%) with the exception of power and utilities which has risen by 1% to 18%.

Energy companies are clearly some of the worst offenders.

That’s why it’s so important that organisations like POWERful Women exist and I salute the other movers and shakers behind this network. Independent accountability, bringing together research and best practice, is central to creating change.

I am sure for most people this is a moral and social imperative. But it is also a business one.

The McKinsey ‘Diversity Matters’ report, proves that diverse organisations perform better. A bigger talent pool, improved employee engagement, improved understanding of customer base, improved decision-making and problem-solving.

Within the civil service we understand how important it is to reflect the public we serve. The civil service is 54% women and four departments are 50:50. But overall only 40% of Senior Civil Servants are women. This is why it is a focus area for us and my department has pledged to reach 50% women in the senior civil service by 2025.

We will achieve this upturn in diversity by continuing to focus on areas such as improving recruitment practices (for example, no all-male interview panels), targeted talent schemes, mentoring and reverse mentoring and ensuring development opportunities are based on merit.

Finally, to the two most important groups involved in this battle for change.

To aspiring women in energy – this is your sector, your organisation, your project. Have confidence in yourself and your abilities, we need you here. If there are things that need to be changed, be a part of that change. It’s never easy to challenge the status quo but there are people out there who will help you. Get a mentor, get a sponsor too – someone to advocate for you. Take the development opportunities that are offered to you.

And of course, leave the ladder down. Make sure that’s a ladder that can be climbed by every type of woman.

To those in charge of energy companies – this isn’t easy, it takes a lot of sustained effort and it doesn’t happen without being brave. Women are 50% of the population, and not only deserve to represent 50% of your business at all levels, but need to be there in order for you to be the best that you can be.

If you are a leader of an energy company taking steps on women’s equality and facing some challenges – I applaud you. If you’re lagging behind – buck up! This is a priority for every progressive leader today.

Your workforce, your customers and your peers are watching. This matters to them as it should to you.

This blog post is based on a speech given by Alex Chisholm, Permanent Secretary, Department for Business, Energy and Industrial Strategy at the POWERful Women 3rd Anniversary Reception at the House of Lords on 15 June 2017.

Read more about POWERful Women here: www.powerfulwomen.org.uk

UK is no energy island

Steve Holliday

Steve Holliday, Vice President of Energy Institute and former CEO of National Grid

Red flags have this week been raised by engineers and other professionals who work to provide a reliable supply of energy to our homes, workplaces and roads, that energy must be a serious priority for Messrs Davis and Barnier at the negotiating table in Brussels.

During my decade at the helm of National Grid I was acutely aware of the interconnected nature of the UK’s energy system. As an island nation we enjoy enormous indigenous energy resources. But the efficiencies available through trading energy with our European neighbours offer huge benefits to consumers, the resilience of our economy and the environment.

We are physically connected. Vital electricity cables lie on the sea bed connecting the UK to France, Ireland and the Netherlands. Gas pipelines link our system to Belgium, Ireland and the Netherlands. About 5% of the UK’s electricity is imported from the EU, and 38% of its gas.

Interconnection is the most tangible manifestation of collaboration with our European neighbours in the energy sphere. There are many others – standards on cars and kitchen appliances; targets on renewables energy efficiency and carbon reduction – these provide a level playing field for mutually beneficial gain.

Membership of the EU is not essential to a fruitful relationship with European neighbours – after all Norway provides up to a fifth of the UK’s gas – but what will be complicated is disentangling decades of carefully crafted market integration and finding new mechanisms for achieving similar benefits.

So I’m not surprised that the Energy Institute’s new 2017 Energy Barometer ranks Brexit uncertainty among the five most pressing concerns of energy professionals. And those surveyed are very clear on the four big signposts for the new Government as it navigates Brexit.

First – existing EU energy laws that govern how Europe’s energy markets work should be transferred into UK policy post-Brexit as a top priority and as seamlessly as possible. Second – the UK must retain the closest possible cooperation with the EU. It would be a mistake to assume going it alone is an option – not least in the case of Ireland and Northern Ireland, who presently share a single all-Island Energy Market. Third – the Government needs to act to ensure the necessary skilled workforce is available to the energy industry, prioritising engineers in particular. Nearly 60% of those responding to the Barometer anticipate a fall in the number of skilled workers, if free movement of labour is curtailed.

Lastly, energy investors are desperate for a predictable, no-surprises policy environment. Energy and climate policy has been on ice for the best part of a year. After a decade of tremendous progress in decarbonisation in the power sector, investor confidence has also chilled. Investment in clean energy plunged in the first quarter of 2017 to around $1bn, the lowest since 2010. Add to this the potential loss of around £2.5 billion of EIB bank loans in energy each year and the need for government to defrost its strategy is critical.

That means bringing clarity, soon, through the much heralded Industrial Strategy, a Clean Growth Plan to meet our carbon reduction targets, and breaking the logjam of delayed policies.

The UK is no energy island. Energy, due to its complexity, investment lead times and importance to our economy and society, stands out as a special case among industries which are heavily integrated at the European level in need of an effective, clear and far-sighted government strategy. And it must be one that retains essential links – and future ambition – to make the most of collaboration with our energy neighbours on the European mainland.

The Energy Institute’s Energy Barometer 2017 is available here.

This blog post first appeared as an article for the Times comment online on 29 June 2017

When it comes to tackling climate change, can the UK hold its nerve?

Jim Skea CBE FEI

Professor Jim Skea CBE EI President

We are in danger of missing legally-binding emissions targets set out in the Climate Change Act. If we’re to fulfil our international obligations under the Paris agreement, we need to up our game—and fast.

For those of us wrestling with how the world should respond to something so scientifically beyond doubt as man-made climate change, the rollercoaster of short-term politics is dizzying. The ups and downs make it hard to discern whether one’s glass, at any given time, is half empty or half full.

Despite recent events, my glass is, surprisingly, half full in relation to the impact of US climate policy. When it comes to the situation on this side of the pond, in contrast, my glass is half empty. This might sound counter-intuitive—but let me explain.

The immediate reaction to President Donald Trump pulling the US out of the 2015 Paris Climate Agreement—which brought all countries for the first time into a common cause to keep global temperature rise this century well below 2C above pre-industrial levels—was loud and despairing. Newly elected President of France Emmanuel Macron said in a televised address that Trump had “committed an error for the interests of his country, his people and a mistake for the future of our planet.” And it was hard not to see it as such.

But to Christiana Figueres, seen by many as the architect of Paris, it was “a vacuous political melodrama.” This assessment was an early, eloquent hint at a more sanguine view that has come to bear.

President Trump’s decision had the effect of galvanising the remaining big blocs—the EU, India, China and others—into reaffirming their commitment to global action. Likewise many individual US states—who between them control around 70 per cent of US carbon emissions—have also committed to delivering on Paris. And the combination of market forces and technological change is also forcing down US emissions.

According to UK energy professionals surveyed for the Energy Institute’s 2017 Energy Barometer, published yesterday, 66 per cent believe President Trump’s decision will have no effect or is surmountable if US action continues at state level and federal support is reinstated under a future administration.

Turning to the situation in the UK, I am currently less optimistic.

As one of the pioneers of climate action, the UK has been in the driving seat of the EU’s climate leadership. Founded on cross party consensus—in 2008 only three MPs voted against the UK’s ambitious domestic legislation, the Climate Change Act—it was reassuring to hear the Queen reaffirm in last week’s state opening of parliament that the government intends to “continue to support international action against climate change, including the implementation of the Paris Agreement.”

But Paris cannot simply be pigeonholed as foreign policy. It is a global agreement, but it requires clear and determined action domestically on the part of all signatories.
In the UK, sticking to commitments under the Climate Change Act is just the starter. The Paris Agreement means we have to go further and up our ambition, aiming towards zero emissions in the second half of this century.

But the Energy Barometer finds that 77 per cent of UK energy professionals believe we will fall short or significantly short of the 57 per cent reduction in emissions on 1990 levels required under the Climate Change Act by 2030.

This assessment is in the context of existing policies and reflects a similar finding by the Committee on Climate Change—that we are likely to hit the current second and third carbon budgets but, without significant policy innovation, the fourth and fifth will prove elusive.

The Institutional Investors Group on Climate Change advised ministers earlier this year that they must set out a clear long-term vision for the future of climate related policy to 2030 and beyond if investment is to be made in the UK.

We have been waiting for this since government and parliament accepted the Committee on Climate Change’s advice on the fifth carbon budget a year ago.

But energy and climate change policy has effectively been on ice. Distracted by Brexit, elections and other major challenges, the Clean Growth Plan is now delayed well beyond the statutory deadline. Other long-awaited policies remain on the Whitehall drawing board.

After a decade of tremendous progress in decarbonisation and renewable investment in the power sector, this has knocked investor confidence. Investment in clean energy plunged in the first quarter of 2017 to around $1bn, the lowest since 2010. Add to this the potential loss of around £2.5bn of European Investment Bank loans in energy each year and the need for government to deliver a clear and credible strategy is critical.

The low carbon transition is a challenge for any advanced economy and, set against Brexit, an unenviable task. But commitments made in law and on the international stage must be matched by actions on the ground.

Signs of action are needed soon if my optimism—and my glass—are to be replenished.

The Energy Institute’s Energy Barometer 2017 is available here.

The Committee on Climate Change’s statutory 2017 Report to Parliament is available here.

This blog post first appeared as an article for Prospect magazine online on 28 June 2017

Women are global agents of change

 

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Louise Kingham OBE FEI, Chief Executive, Energy Institute

Two facts put into stark relief the disproportionate impact climate change and lack of access to adequate energy have on women:

• Of the 150,000 people killed in the 1991 Bangladesh cyclone – it is estimated that 90% were women.

• Around 4 million people die each year prematurely simply from trying to cook food, heat or light their homes using solid fuels. Most of these are women and children.

We have, in a relatively short period of time, made astonishing progress in our understanding of our changing planet and the impact we’re having on it. The detrimental effects of climate change are already being felt, not only by the natural world but also on the lives of billions. Landslides, floods, hurricanes and long term environmental degradation are affecting agriculture, food security, water resources, health, human settlements and migration patterns.

Unfortunately the majority of the world’s poor are women and climate change amplifies the problems they already face. Women are more reliant on natural resources. They are more likely to be responsible for securing food, fuel and water for their families and more dependent on natural resources for their livelihoods. So they face the greatest challenges when those resources are disrupted. And women are often afforded a lower social standing and have less capacity to cope and respond to natural hazards. Society sometimes prevents them from acquiring the skills needed – for instance the ability to swim. And, at times of food scarcity, they fare worse than men.

Similarly, not having access to adequate energy affects women disproportionately. Forty percent of the world’s population still rely on wood, coal, charcoal or dung for cooking and heating. Inhaling smoke from conventional cooking fires and kerosene lamps in small homes, often without chimneys or windows, causes respiratory disease, heart disease and burns. Four million people die prematurely as a result of this each year – more than malaria, tuberculosis and HIV/AIDS combined. Most of these are women and children.

Solutions driven by women

What is clear to me is that solving these massive global challenges requires the ingenuity of both men and women. Indeed without the full participation of women, we have one arm tied behind our back. Thankfully, concerted moves are afoot to tackle climate change and access to energy. And I believe there are many positive stories to be told about women who are proving transformational in terms of the search for solutions.

Christiana Figueres is a Costa Rican diplomat with 35 years of experience in high level national and international policy and multilateral negotiations. She was appointed Executive Secretary of the UN Framework Convention on Climate Change in 2010, six months after the disastrous climate change summit in Copenhagen. During the six years that followed she dedicated herself tirelessly to rebuilding the global climate change negotiating process. By putting fairness, transparency and collaboration – attributes found in abundance in women – at the heart of her approach she is widely credited with brokering what Ban Ki Moon described as “a new covenant for the future”.

And, on the front line, look at the fantastic work of Solar Sister, helping to tackle energy poverty by empowering women with economic opportunity. Their work combines the breakthrough potential of cheap solar energy technology with a deliberately woman-centered direct sales network to bring light, hope and opportunity to the most remote communities in rural Africa. Working in Uganda, Tanzania and Nigeria, Solar Sister involves 2,500 entrepreneurs and has benefited 700,000 people.

I am not complacent, there is much more to do. Regrettably the UK energy profession’s gender representation is poor. 61% of the top 100 UK energy companies have all male boards. Little more than 13% of the entire energy sector in the UK are women. But there is evidence of change and efforts to bring it about. Most prominently in the renewables sector where 17% are women. Still low, but better.

Women must be, and are, global agents of change. They have a vital contribution to make, alongside men, in ensuring we throw every bit of ingenuity we can at finding the best solutions to these global challenges.

 

This blog post is based on a lecture given by Louise Kingham at the University of Bath on 11 May 2017.

A low-carbon future and the case for urgency

 

Jim Skea CBE FEI

Professor Jim Skea CBE EI President

 

The transition to clean energy  is irreversible but it needs to speed up, according to Professor Jim Skea, president of the Energy Institute and co-chair  of IPCC Working Group 3


Democracies are complex animals. The consent and legitimacy they confer on those who govern is a stabilising feature of most modern societies and thankfully, generally, this serves us well. But amidst the issues competing for voter favour, short-termism and sensationalism can eclipse the long-term and the evidence-based.

A challenge this poses to those of us wrestling with intergenerational concerns such as climate change is how to sustain backing for vital action over decades – how to ensure horizons extend beyond the next election. But despite changes in energy policy in individual countries, the global shift to low-carbon is now, I believe, hard-wired into our energy system in a way that will ride out the ups and downs of short-term political cycles.

 Why am I certain?

 First, although in some quarters it may not be fashionable, we should not underestimate the power of evidence. The Fifth Assessment report of the Intergovernmental Panel on Climate Change (IPCC) is the most unequivocal articulation yet of the direct link between human activities and the changing climate. And the evidence continues to mount – 2016 was the hottest year ever recorded , underscoring the urgency of emission reduction and adaptation.

How our economies respond to this challenge also calls for the application of evidence, by governments, the private sector and through institutions such as the Energy Institute, which works to bring the best expertise and knowledge to bear in the public debate.

Secondly, the global agreement reached in Paris sent an enduring signal. The world’s nations have escaped the prisoner’s dilemma and committed to decarbonise for the sakes of both our shared environment and their economies. Paris will survive any doubts– as we have seen in the continued commitments from China, India and the EU.

Thirdly, technological innovation, spurred by cost reductions in clean energy, is an unstoppable driver for change. The cost of manufacturing one watt of solar PV cell capacity fell from $76.67 in 1977 to a staggering 36 cents in 2014, according to Bloomberg New Energy Finance. This, combined with cost reductions in storage, is opening up extraordinary new possibilities. Global investment in renewable power capacity reached a record $265.8bn in 2015, according to UNEP, which was more than double that for new coal and  gas generation.

Likewise in oil and gas, climate change has become a mainstream, existential issue. The Energy Institute’s recent International Petroleum Week, attended by IPCC chair Dr Hoesung Lee and UNFCCC executive secretary Patricia Espinosa, saw meaningful dialogue about the industry’s role in defining pathways to decarbonisation and bringing on the technologies such as carbon capture that will make it possible.

But is it enough? 

The test of human ability to avert the most dangerous impacts of climate change won’t be whether we decarbonise, but how quickly we do it. With the weight of scientific evidence and the strength of international resolve behind us, the pace of clean energy investment must speed up.

Just as the horizons for tackling climate change are beyond a single electoral cycle, so too are those for investing at scale in new technologies. The smartest companies have spotted the direction of travel and are taking the long view. And they will certainly reap the benefits.

This blog post was first published as an article in a supplement of the New Statesman on 28 April 2017, you can read the full supplement here.