Energy Barometer – professional insights for robust energy and industrial policy

Professor Jim Skea CBE Hon FEI – EI President

2016 presented challenges and marked big changes, for the UK as a whole and for the energy industry as a key part of the British economy. I hardly need to mention the Brexit vote, a new Prime Minister, the merging of the Department of Energy and Climate Change into the new Department for Business, Energy and Industrial Strategy and the US elections to evoke the deep uncertainty that has characterised the past year.

One month into 2017, government, industry and the Energy Institute are looking ahead and trying to answer some essential questions: what changes are needed in the energy industry, how can policies help achieve the desired change, and how will these changes impact us today, next year, and in 5 years? What are the priorities moving forward?

Now is a pivotal time for UK policy development, which faces big challenges and also significant opportunities: negotiating the UK’s exit from the EU, the formation and implementation of a Modern Industrial Strategy, carving a path to make good on the UK’s Paris Agreement commitment through a new Emissions Reduction Plan, and setting a global example by leading on climate action.

Evidence is essential to policy makers as they tackle the complexity presented by these challenges. How to meet emissions targets, while improving the competitiveness of UK industries, in a scenario where the UK is expected to leave the EU single market? . Consultations, such as that just opened on BEIS’s approach to industrial strategy, are one way that policy makers tap the knowledge and expertise of those on the ground in the energy industry. The EI’s Energy Barometer is another unique opportunity, offered to only a selection of EI members each year.

By gathering evidence in the Energy Barometer questionnaire, the EI acts as an honest broker of the views of energy professionals about the challenges, opportunities, and priorities facing the UK’s energy industry. Our members have in-depth knowledge because they experience the industry first hand. Those who provide views and opinions through the Barometer include seasoned industry experts as well as those with fresh eyes who have started careers in energy only in the last 5 years. All of them offer insights otherwise unavailable to policy makers.

EI members thus have a unique opportunity to provide an invaluable input to the policy- making process. By participating in the Energy Barometer, they are helping to ground energy policy and industrial strategy in their own experience. The survey has been sent to College members in the first week of February. If you are invited, please don’t miss this chance to provide vital evidence which is needed and wanted to inform policy decisions.

Diversity and convergence: the 2016 Energy Barometer

Professor Jim Skea CBE
EI President

Energy professionals are a pretty diverse lot: engineers, managers, planners, finance people, lawyers and others. Lots of different perspectives but some remarkably convergent views have emerged from the 2016 Energy Barometer survey of 438 members of the Energy Institute. And the points on which they agree could be seen as some of the most contentious.

On Brexit, an overwhelming majority of contributors foresee negative effects on the UK energy system, especially in relation to securing energy supplies, renewable energy development, climate change and sustainability, and air quality. On the biggest challenges facing the energy sector, lack of continuity in energy policy, closely linked to investment obstacles, came out easily as the number one concern.

Scepticism that politicians’ appetite for ambitious climate targets is matched by their capacity and/or willingness to deliver marks a third area of striking consensus. More than 70% believed the world would warm by more than 2°C, regardless of the even more ambitious Paris agreement. And more than half thought the UK would fall “significantly” short of its own 80% emissions reduction target by 2050. Closer to the present day, there was also scepticism about the UK’s ability to meet its 3^rd, 4^th and 5^th carbon budgets. However, my personal view (and I was one of the randomly selected Barometer participants) is that the UK will easily meet the 3^rd carbon budget through Alice in Wonderland net carbon accounting and interactions with the EU Emissions Trading Scheme (should we remain part of it).

A final area of consensus, and one close to the Energy Institute, lies in the perceived shortage of skilled workers across all parts of the energy sector except North Sea oil and gas and fossil fuel electricity generation. Nuclear is seen as having the greatest shortage in skilled workers, both today and in five years’ time.

It is not all consensus of course and, if there were, the value of the Barometer would be diminished. For example, there is a range of views about prospects for gas and electricity prices, with more of a balance between those who thought prices would rise, those who thought prices would fall and those who thought they would stay roughly the same. But there is a tendency for more respondents to foresee electricity rather than gas prices rising as a result of investment needs for infrastructure and low carbon supply.

So what have we learned as an institute from conducting the survey? First, our members are enthusiastic and ready to contribute their expertise to the public debate. Second, that government and other stakeholders are ready to listen. We are launching this year’s report as part of the Energy Systems conference, organised with our partners at Elsevier. The 2016 Energy Barometer project, led by Dr Joanne Wade FEI, Chair of the Energy Advisory Panel, looks like a big success that builds on the 2015 launch of the Barometer. Who know what will happen in the next year (or even on the next 10 days)? But the world will listen if Energy Institute members voice their views again in 2017.

Climate Action in the US

Professor Jim Skea CBE
EI President

I had the good fortune to be invited to the Climate Action 2016 Summit in Washington DC in early May. This was a truly stellar event hosted by the UN Secretary General, the World Bank, the Rockefeller Foundation and the World Business Council for Sustainable Development. The broad aim was to galvanise bottom-up climate change action as implied by the Paris agreement reached at the end of last year.

Apart from keynote talks from the great and good – Ban Ki-moon, Al Gore, Ségolène Royal, Jeffrey Sachs – what was fascinating was a) the degree of enthusiasm behind the climate agenda and b) the particular groups that were strongly represented at the meeting. The energy sector, notably, was not which I’ll come back to later.

There was particularly strong participation from city administrations, the finance sector and consumer-facing businesses. On the city side, Michael Bloomberg, businessman and former Republican Mayor of New York, made a strong case for the power of city administrations to effect real change through their influence on transport and planning. This message was endorsed by mayors from Washington DC, Atlanta, Montreal, Paris, Belo Horizonte in Brazil and Pristina in Kosovo. Prospective mayors of Sheffield and Manchester take note. As the event took place on the same day that London elected its new mayor, I did feel there was one important city in need of representation.

The finance community, both the multilateral developments banks (like the Asian Development Bank) and private sector investors and insurers, were out in numbers. Here the call was for carbon pricing to underpin low carbon investments and considerable celebration of the falling cost of renewable energy and energy storage. The one voice flagging up the limitations of carbon pricing was development economist Jeffrey Sachs from Columbia University’s Earth Institute. He warned that the ambition in the Paris agreement implied that planning and regulation were needed as well.

Business was represented by companies like Unilever (CEO Paul Polman) and Kelloggs. Message: they’re getting on with it especially in terms of greening the supply chains. But no real input from the energy sector! This point was explicitly addressed by Peter Bakker from the World Business Council for Sustainable Development. He was explicit that energy companies, including oil and gas companies, needed to be part of the agenda. Any transition away from fossil fuels would take decades and would need to be actively managed by all concerned. The hostility towards fossil fuels – and certain fossil fuel companies – expressed by some of the activists at the summit was not constructive and could certainly have discouraged attendance. A role for the Energy Institute in fostering dialogue and debate on these issues?

Finally, a word on how strongly the UK was represented at the meeting, both in terms of the number of participants from private companies and international organisations, and in terms of the quality of the input. Unfair to single out any one person, but Rachel Kyte, leader of the UN Secretary General’s Sustainable Energy for All initiative and former Vice-President of the World Bank, stood out in terms of commitment, grasp of her brief and quality of advocacy. Proof that climate action and energy access can go hand in hand.

Standing out from the crowd

Louise Kingham

Sadly another bright light in the energy world went out recently with the passing of Professor Sir David MacKay, physicist, mathematician, Cambridge professor and former DECC chief scientist. As a recipient of the EI’s Melchett Award, one of its most prestigious, I had the pleasure of spending a little time with David then and was touched as many have been reading his most recent blog posts written from his hospital bed, where still he promoted energy efficiency and sustainability in his rational and pragmatic way. Many will also have read his books, most notably Sustainable Energy: Without the Hot Air which he made freely available – my copy is well thumbed. A modest, gentle humoured and very clever man in business company, he was not the obvious candidate to shout from the rooftops but his commitment and passion for getting on with sustainable energy transformation made him stand out and for that I hope he is long remembered.

Making people stand out for their achievements in the quest for energy excellence is simply the right thing to do. Celebrating success, recognising the talented and diverse brains that rise to our energy challenge and showcasing the dynamic, innovative and exciting world of energy we serve is essential. How else can we improve the energy literacy of our stakeholders and attract talented people who can innovate to solve one of the world’s greatest challenges? It’s simply right to recognise the good we do.

So my plea, in David’s memory, is step up to be recognised for the part you and your team is playing and be recognised for the excellent work you do. We must lead so others can follow. Our Awards competition celebrates the best in the industry, and we hope to count you among the winners.

Pressing home the message

Professor Jim Skea CBE
EI President

By now, many of the EI’s members will have received an invitation to join the EI College and help the Energy Institute project the views of its professional members to Government and beyond through its annual Energy Barometer report. Please do not ignore this invitation. This is probably one of the most effective ways that an EI member can participate in the public debate about energy, influence policy and help shape messages for society at large.

This year’s Energy Barometer survey, to which all College members are invited to contribute, comes at crucial time – just eight months after the General Election and two months after the Secretary of State for Energy and Climate Change’s much anticipated “reset” speech. Last year, College members told us that policy continuity was essential for reducing investment risk, promoting the better use of existing technology and increasing innovation. They also told us that investment risk had risen over the previous 12 months in almost all parts of the energy system. Read the Energy Barometer 2015 report.

What will you tell us and policymakers this year? It has certainly been a roller-coaster ride in the UK over the last few months, with major policy changes on renewables, energy efficiency and carbon capture and storage. Oil prices have fallen below $30/barrel with potential implications for investment in fossil and non-fossil energy alike. On the other hand, climate negotiators surprised the world (and perhaps themselves) by reaching an ambitious agreement at COP21 in Paris at the beginning of December, aiming to hold global temperature increases to well below 2 °C. Now every one of the 195 countries that have signed up is faced with the task of turning ambitious emission pledges into reality on the ground.

At no point in the last 25 years have the professional insights and skills of energy industry professionals been of more importance in helping the world to face up to both a longer term transition and shorter-term volatility.

Energy is a strategic business and the industry needs to work hand-in-hand with governments to deliver secure, affordable supplies of energy to consumers in a sustainable way. This requires trust and continuing dialogue between all parties. The EI College and the Energy Barometer are a crucial part of that dialogue. Government will listen when members of the professional body for the energy industry speak. The fact that the EI covers all parts of the energy sector – renewable and non-renewable, supply-side and demand-side, engineering as well as other professions such as law and finance – gives added weight. By taking an active part and responding to the Energy Barometer survey, EI members will help to ensure that government, society and the industry itself can make their plans based on the best professional advice. If you have received an invitation to participate, do please accept.

Invitations to join the EI College have been issued by email and the deadline for response was 15 January. The EI Energy Barometer survey will be circulated to participants online w/c 25 January 2016. If you are interested in contributing to this year’s research but haven’t yet responded, you can still RSVP through the email invitation you received up until the end of January.

Shaping the energy policy conversation

Dr Joanne Wade

The EI’s Energy Barometer 2015 was an undoubted success. A high proportion (63%) of EI members in our College responded to the survey. Their comments provided us with strong, unified messages about policy continuity, investor confidence and innovation support, skills needed for the future, and the need to improve the way we communicate energy matters and engage with the public.

The Barometer was well received by the EI membership: the opportunity to participate was welcomed and the final report was impressive. There was great coverage of its key messages in the trade press, and policymakers also gave the report a positive reception. The EI now has regular meetings with DECC officials and advisors, including invitations for them to feed in to question development for future Barometer surveys. But this is just the beginning – we must build on this excellent start in 2016.

We want greater participation from EI members and will be expanding the College, inviting an additional 2,000 FEI, MEI and GradEIs to join. We also have plans to engage more frequently with College members throughout the year, seeking their contribution to potential mini-surveys, deep-dive interviews and policy consultations. We are aiming for continued involvement from policymakers, asking them to tell us what they want to know from the report as we cover new topics, including the outcomes from COP21, and with an eye to future policy events such as the EU referendum.

2016 will be just one important step on the road to developing the EI’s Energy Barometer into a powerful tool. We will develop a picture of key trends on issues such as prices, drawn from repeated questions in successive surveys. And, as the EI works to anticipate major policy events, the Barometer will provide the information we need to respond rapidly to energy stories in the news and be a relevant and reliable source of timely information for Government and the media.

The success of the Energy Barometer lies with the EI’s members. Their collective knowledge, diverse opinions, and first-hand insight are the real value inherent in the project. All members are welcome to contribute to the development of future Barometer surveys: send us your ideas for questions now. College tenure runs for two years, enabling all members to actively participate on a rolling basis. If you are invited this year, please give us the benefit of your insight: accept the invitation and then, when the time comes, respond to the survey so that your views help to shape the energy policy conversation.

Dr Joanne Wade FEI chairs the EI’s Energy Advisory Panel.

Why can’t we get engaged?

Ian Marchant FEI

I have spent over 25 years in the energy industry and the attitude of society to that industry has changed over this time. In my early days in the sector, the industry was largely taken for granted. In fact, when I told friends I was joining the energy industry the general response was bewilderment because they thought it was boring. However, my experience has been the exact opposite. I have had a fulfilling and interesting career but that isn’t my point. It’s about how attitudes have changed.

Over the last ten years or so, I have found that people are generally much more interested in energy. They want to know about what is happening to prices, who owns the industry and what choices the industry is facing. There is a lot of debate nowadays. It could be whether we should build a new nuclear power station. It could be whether the UK should start fracking. Or it could be whether wind farms are a blot on the landscape or a modern and clean form of electricity production.

However, there is a problem. The industry has struggled to engage in these debates in a meaningful and positive way and I have been wondering why that should be. I have not got a clear answer, just a few theories. Is it because our industry is an essential commodity so we haven’t had to really invest in branding and sales like the makers of shampoo, baked beans or summer holidays? Maybe it’s because our industry is generally populated by engineers and accountants (guilty as charged)? Or maybe it’s because we all have different views ourselves on what we think the right answers are to the choices we face, so society hears a cacophony of voices coming from our industry. Finally, I wonder whether the complicated and long term nature of many of our decisions don’t play well in our 24 hour instant media world. What do you think?

Energy and society

Louise Kingham OBE
EI Chief Executive

What the EI does – supporting and recognising energy professionals to solve energy challenges – is the ultimate in public benefit because it’s FOR society. The trouble is, it’s usually not WITH society and there in lies the nub of the problem for energy development. The EI’s Council has been debating how the EI can help bridge this gap in communications and build understanding. By doing so, we reduce fear and uncertainty, we present the evidence – the facts – and let people make better informed decisions about energy issues. These people are likely to be the people that make energy system change happen – they just don’t realise the power in their own hands. In society today, energy development is decided anywhere from the highest order of governments all the way to the remotest local citizens.

With 21,000 energy experts among us – who are all members of society and community – we have the opportunity to help solve this problem. We just need to work out the most effective way to do so.

At the same time as working locally, it’s important that some of our most eminent members succeed on a global stage. For example, EI’s Honorary Fellows including Sir David King, Lord Browne, Lord Stern and Lord Turner are among the authors of the Apollo Programme – which calls for a fraction of public funds from countries to deliver a global research programme to solve the challenges of climate change at scale. The simple ideas are often the best and experts understand the technologies that could make a difference now. Again at a global scale, it’s garnering support from decision-makers who don’t see themselves as part of the energy solution but have the power to be so.

If you have views about how the EI should help society understand energy then do get in touch at lkingham@energyinst.org (or tweet #understandenergy)

Energy Institute blog

Creating a better energy future

public engagement

Energy Barometer – professional insights for robust energy and industrial policy

Diversity and convergence: the 2016 Energy Barometer

Climate Action in the US

Standing out from the crowd

Pressing home the message

Shaping the energy policy conversation

Why can’t we get engaged?

Energy and society

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