Progress far too slow on cutting emissions, says watchdog

Actual (blue) and needed greenhouse gas emissions for the UK. The Committee says they only began declining again in the last year by coincidence. Click for larger version.

The Government must quadruple its efforts to reduce greenhouse gas emissions if it is to meet future carbon budgets warns the watchdog Committee on Climate Change in its new annual report.

It says that despite greenhouse gas emissions falling by 7% last year, only 0.8% of this fall was due to Government policy. The rest happened because of coincidental factors which cannot be relied upon to meet targets.

“Much of last year’s fall in emissions was due to a combination of mild weather, rising fuel prices, falling incomes and transitory factors in power generation," said David Kennedy, Chief Executive of the CCC. "But as the economy recovers it will be difficult to keep the country on track to meet carbon budgets. We need to tackle major challenges to drive emissions down across the economy – and to do this as a matter of urgency.”

Yesterday, Energy Minister Charles Hendry was celebrating apparent progress in decarbonising the UK grid, as his department issued its quarterly energy statistics. He said they showed "a clear increase on the first quarter of last year across all renewables, with rises in wind, hydro, solar and bioenergy generation.

“Alongside a 36% increase in renewables capacity in the last 12 months, this shows that the UK is powering forward on clean and secure energy and is clearly a very attractive place to invest,” he said.

The latest energy statistics do record progress, with onshore wind generation increasing by 51% and offshore by 51% in the first quarter of 2012, and the high amount of rainfall helped to boost hydroelectric generation by 43%. In 2011, renewable heat sources increased by 5% but still only accounted for around 2.2% of total heat demand.

This is good news but not good enough for the Committee.

In reducing emissions, decarbonising the power sector is only part of the picture. Nevertheless, the report complains that investment in wind generation in 2011 was just one third of the rate required annually to achieve the target by the end of the decade.

It says that a total of £8 billion is required to support low carbon generation by 2020-21, which would satisfy a shopping list of one new nuclear reactor, four CCS demonstration projects, 15GW of onshore and 12GW of offshore wind, plus a mix of other renewables.

The important figure for the statistics comes in terms of measuring progress towards the 2020 target of deriving 15% of all energy from renewable sources, as specified under the 2009 Renewable Energy Directive. The provisional figures show that during 2011, just 3.8% of final energy consumption was from renewable sources. This is an increase from the revised 2010 figure of 3.2%, and 3.0% in 2009.

Although there is plenty of potential new wind generation in the pipeline, the Committee says that “delivering investments will require resolution of current policy uncertainties, and that financing barriers are addressed".

Most urgently it wants to see support levels confirmed under the Renewables Obligation. Then there must be a major role for the Green Investment Bank in mobilising project finance for offshore wind investment. The Government also needs to work with its EU partners to strengthen the carbon price within the EU emissions trading scheme.

The Committee is furthermore concerned at the lack of progress on carbon capture and storage (CCS). It warns that projects must be selected and funding awarded this year, with construction starting by 2014.

It recommends further incentives: to increase uptake particularly of cavity wall and loft insulation in the Green Deal and the Energy Company Obligation, to support renewable heat in the residential sector, and to address market barriers such as households not having confidence in or enough information about renewable heat technologies.

It advises retaining the Carbon Reduction Commitment, but with a reduced administrative burden and a redesigned league table to strengthen reputational incentives.

There should be a Green Deal for the non-residential sector in place by the end of the year and ambitious standards for private rented regulation in the non-residential sector by the end of 2013.

It also wants to see, in the forthcoming industry strategy, approaches set out to increase the use of sustainable bioenergy in large industry.

Transport

Renewable biofuels for transport actually fell by 7% (to 1,127 ktoe), comprising just 3.5% by volume of road transport fuels in 2011.

In this sector, the Committee wants to see more incentives to encourage the reduction of emissions from new vans, an increase in the electric vehicle market, and a reversal of the decision on company car tax relief for electric vehicles which George Osborne made in the last budget.

In the Budget 2012 George Osborne announced that company car tax exemption for electric vehicles would be withdrawn from 2015/16. This decision, the Committee says, will not raise significant revenue, given the low sales of electric vehicles, but it will undermine incentives for purchase of electric company cars, a market niche where there is a potentially high share of early adopters.

Interestingly, the Committee proposes that driving tests should include standards for driving fuel-efficiently, and wants to see the current motorway speed limit enforced properly, code for saying do not increase the speed limit.

Agriculture must play its part, the Committee says, and there needs to be a robust framework in place for monitoring changes in farming practice that influence emissions, and by the end of the year a strategy for going beyond the current voluntary approach in the sector to cutting emissions.

The Committee wants to see the electricity market reforms set a clear objective of achieving carbon intensity in power generation of the order of 50gCO2/kWh in 2030. This would "provide investor confidence that there will be a market for low carbon technologies that are built to schedule and cost and that there will not be a second dash for gas".

In conclusion, the Committee issues a stark warning: "when we first highlighted the need for a step change in investment there was a lead-time of several years, but this has now elapsed. Therefore the step change is needed urgently if we are to remain on track to meeting future carbon budgets".

UK has the largest green skills gap in Europe - report

Green Deal jobs like insulating this ceiling are going to decline. So much for the Greenest Government Ever.

The UK has been singled out for having skill gaps in more occupations in the green economy than eight other EU countries.

A new study also says that demand for such skilled workers is highly dependent on environmental regulations and subsidies, and governments need to do more to integrate their energy, environment and skills policies.

The shift to a green economy will not only generate new jobs, but will also change the scope and character of existing jobs. Demand for energy auditors, electricians, solar PV installers, sheet-metal workers and insulation workers is forecast to rise in most of the eight countries in the study.

These occupations, which require medium-skill levels, have more growth potential than higher-skilled occupations, which employ fewer people, the report says.

The UK, Germany and Finland are three out of the eight countries that predict future increases in the number of jobs across the widest range of occupations.

But the UK lacks the appropriate skills more than any other country, and is blamed for introducing changes to legislation (along with the Netherlands) that are expected to reduce demand for energy auditors, solar PV installers and insulation workers.

Ministers have suggested that the introduction of the Green Deal will increase employment in two of these sectors. But the Energy Bill's own impact assessment reveals that the number of insulation installations could actually reduce under the Green Deal from previous levels, which will cut the number of jobs in these sectors.

The research comes from Green Skills and Environmental Awareness in Vocational Education and Training, a report from the Institute for Employment Studies (IES) prepared for the European Centre for the Development of Vocational Training (Cedefop), which looked at nine different job roles (see below) in eight EU member states: Germany, Greece, Italy, Hungary, the Netherlands, Slovakia, Finland and the UK.

The need for consistent regulation

It recommends several policies that will help businesses take advantage of opportunities in the transition to a greener economy, and ensure the availability of appropriately skilled workers.

The most important of these is consistent regulation and sustained investment over a prolonged period of time, to ensure that the markets for these products and services become self-sustaining. Secondly, financial incentives need to be phased out gradually to prevent dependency on state funding and to avoid ‘shocks’ that could cause businesses to fail and jobs to be lost.

But it's not just a matter of legislation, the report says. Businesses and private consumers need to be better and more actively informed of the benefits of investment in energy-efficient equipment, systems, products and services, through better marketing and information, advice and guidance from governments.

Generally, the occupations in which job numbers are predicted to increase are in renewable energies, the environment and new technologies, while they are predicted to decline in sectors worst affected by the recession, such as construction.

In the last three years there has been an increase in the number of jobs for insulation workers and electricians and, in relative terms, for nanotechnology engineers and environmental engineers.

The data also show stable or slightly increasing demand for sheet-metal workers and refuse collectors. Only in the cases of solar photovoltaic installers and transport vehicle/energy auditors does it appear that employment has contracted.

Gaps in learning provision

One of the main gaps in learning provision is for insulation workers and solar PV installers.

The UK was especially picked out for having employers who lack experience of transparency in the content and quality of training in solar PV.

In their survey responses, learning providers across the eight states said they were enthusiastic to change the content of curricula to meet new demands. However, action has been rather piecemeal and reactive so far, although less so among those providing tuition for new occupations such as energy auditors and solar PV installers.

All states were criticised for not doing enough to steer unemployed workers, young people or disadvantaged groups into the target occupations. It said there are very few examples of this kind of project, which could do a lot to help the long-term unemployed.

It recommends also revision of existing curricula, qualification standards and training programmes, and the promotion of green career opportunities hand-in-hand with the raising of their status in society. The occupations most crucial to the green economy, like energy auditors, environmental engineers and insulation workers, are not necessarily known to people as career options.

The sectors examined are:

• nanotechnologist, engineering technologist and environmental engineer as examples of high-skilled occupations
• 
  energy auditor, transport vehicle emissions inspector, insulation worker, electrician, solar photovoltaic installer and sheet-metal worker as examples of medium-skilled occupations
• 
  refuse/recycling collector as an example of a low-skilled occupation.

Despite the politicians, Rio+20 gave us plenty of inspiration

Rio+20 has provided an opportunity for developing countries and some NGOs to complain that the Summit was merely an opportunity for rapacious corporations based in the developed world to further carve up the resources in poor countries for their own benefit.

It is right to be extremely sceptical of the activities of many corporations, particularly when they give grudging assistance, or funds with strings attached that ensure greater ultimate financial returns to them.

Some pledges seem astonishingly miserly. I'm particularly gob-smacked by the one from some of the world's richest energy companies, members of the Global Sustainable Electricity Partnership, who expect us to applaud their donation of a meagre 50,000 solar lanterns to off-grid households. They could easily afford to give 1,000 times this number!

The activities of other corporations shame these. Paul Polman, CEO of Unilever, a company which has made bigger strides than most in trying to turn itself around to become sustainable, made a visionary speech at Rio+20 that is truly inspiring.

He began by saying: "The very essence of capitalism is under threat, as business is now seen as a personal wealth accumulator. We have to bring this world back to sanity and put the greater good ahead of self-interest," he told his corporate audience.

"We need to fight very hard to create an environment out there that is more long term focussed and move away from short termism."

Are you listening, David Cameron and Barack Obama?

Polman said that the lack of ambition shown by politicians are Rio+20 will only make him double his efforts to work with other business leaders and NGOs on sustainable development.

His analysis is: “We are in an inter-dependent world where unfortunately the governmental processes are very local and to internalise these global problems at the political level is proving difficult".

That's putting it mildly.

Relentlessly optimistic, he concluded: "Criticising never leads to anything. The final text has a lot of good elements and there is a declaration for the oceans and a starting process for the Sustainable Development Goals. It recognises an increasing role for business and paints a picture of green growth and a future for the world that we can relate to."

And leading businesses are increasingly recognising that this is what they must do. Partly it is as a result of pressure being brought on them by public campaigns, scientists and NGOs, and partly it is because it is dawning on them that there is nowhere else to go.

The road to the sustainable future was on show at Rio+20, if you knew where to look.

As covered in our news last Friday, Microsoft is to go carbon neutral within a year. Also last week, eBay announced plans to build a data centre powered by startup Bloom Energy's renewable energy fuel cells. These utilise biogas derived from renewable organic waste, the same equipment which Apple last month said it would use to power its main U.S. data centre.

There were many other positive ideas from the private sector on show in Rio. At the splendid Copacabana Palace an initiative called Sustainia100 was launched. It is a showcase of the best, scalable sustainability solutions that exist right now, from solar power in Sudan, to sustainable fashion in Switzerland; from water-cooling in Canada to solar-cooling in Singapore; from buses in Brazil, to smart buildings in Sydney. There are ideas for using bikes, rewarding recycling (currently being used in London) and energy performance contracting.

Talking about transport and energy, what about this? Siemens has reinvented the old idea of the tram with overhead wires, to come up with an 'eHighway' system for trucks that eliminates noxious diesel emissions and noise on heavily travelled roads. It comprises hybrid trucks that automatically connect to the overhead electrical lines, which power them until disconnection, at which point the truck automatically switches back to diesel!

One of my favourite of the scalable innovations has been developed by Velux, a company which has certainly moved with the times. No longer just producing rooftop windows, it is preoccupied nowadays with the more holistic question of sustainable construction. Velux has designed a house optimised to eliminate energy consumption for cooling in the summer, that captures passive solar heat energy in colder months, and takes the most advantage of natural daylight all year round. It uses intelligent ventilation and other modern systems.

A Norwegian company, NCC, has taken this design principle a stage further, to the level of a mid-rise office block. Its O27 building includes a heat recovery ventilation system to optimise indoor conditions, a green roof to absorb stormwater and other ways of minimising energy use. Similar, entirely replicable, principles are used in the Santander Tower south of Rio, in São Paulo, Brazil, while a Forest Office in Skolkovo, Russia is being designed to completely harmonise with its surroundings.

Let's take this even further. How about a green business district? Such a thing already exists in one city: Songdo International Business District in South Korea. Built on reclaimed land and designed by Kohn Pedersen Fox, an international architectural practice, the 100 million square foot master plan includes commercial office space, residences, retail shops, hotels as well as civic and cultural facilities. It will be the first LEED (Leadership in Energy and Environmental Design) certified district in Korea and the largest project outside North America to be included in the LEED ND (Neighborhood Development) Pilot Programme.

You've got your sustainable office block in your sustainable city, now what you need is a sustainable factory. Will a zero carbon, zero industrial discharge one do? And would you like it to churn out cars? This is exactly what is being developed by waste company Veolia Environment in partnership with the Kingdom of Morocco. The Tangiers-based facility also has reduced water consumption by 70% compared to similar facilities and utilises wind energy and biomass boilers fuelled by sustainably harvested olive pits and eucalyptus. Aggressive energy recovery technologies are also employed. It's an operating facility that can produce 400,000 vehicles a year and be replicated around the world.

See? The sustainable future is here now. It just needs the rest of the world to wake up and notice.

Its seeds were planted in the 1970s, at the time when the Centre for Alternative Technology was founded as an experiment in sustainable living. CAT's founders, such as Gerard Morgan-Grenville and Peter Harper, felt that capitalism and technology had moved us away from nature, to our detriment, and that a U-turn was required.

Twenty years later came the first Rio Earth Summit, that filled the world with hope but lacked critical mass. Twenty years since then the world's now-jaded eyes have again been on Rio. In another twenty years' time this U-turn, which is nothing less than a revolution in the way humanity lives alongside nature, will be much nearer to completion.

If it isn't, then the whole of human evolution will have been pointless.

David Cameron fails to back the Green Growth Action Alliance

David Cameron, or Camoron as I have started spelling it, was in Mexico this week and witnessed the launch of a Green Growth Action Alliance, but failed to back it or mention the green economy in his keynote speech to the world's business and G20 leaders.

On Monday, the Prime Minister was at the G20 Business Summit (B20), which serves as a business advisory to G20 officials, where a Task Force on Green Growth attended by Mexican President Felipe Calderón urged Heads of State to adopt policies that will simultaneously help to green and grow the economy in environmentally, economically and socially sustainable ways.

Yet Camoron's speech made no mention of this.

The Green Growth Task Force is asking G20 governments to initiate negotiations to achieve a sustainable energy trade agreement, create a robust price on carbon through coordinated international policies, end fossil fuel subsidies and to direct a portion of carbon price revenues to support innovation in sustainable technologies.

The call to end subsidies for fossil fuels was the subject of a 24-hour "Twitter storm" begun by Stephen Fry and aimed at the G20 and Rio+20, on behalf of 350.org, which attracted over 100,000 tweets.

The Task Force also launched the Green Growth Action Alliance, whose honorary chairman is President Felipe Calderón. This new public-private partnership initiative of comprises 48 of the world’s largest energy companies, international financial institutions, and development finance institutions which aims to address the massive shortfall in financing the low carbon revolution globally.

Wind turbine manufacturer Vestas’ CEO Ditlev Engel explained that it will “boost public and private investment into green infrastructure. Each year, $1 trillion is needed to deliver the necessary infrastructure and to shift us onto a low carbon path.”

To attract finance, and monitored by the World Economic Forum, the Alliance will work with existing initiatives, such as the United Nations’ Sustainable Energy for All initiative, the Green Climate Fund (GCF), the International Development Finance Club (IDFC), currently chaired by Germany's promotional bank KfW, and the San Giorgio Group (a policy research collaborative initiative by the Climate Policy Initiative, the World Bank and the Organisation for Economic Cooperation and Development (OECD)), the Overseas Private Investment Corporation (OPIC), the Climate Policy Initiative and the United Nations Foundation.

Members of the Alliance include leading companies such as Accenture, Samsung, KfW Bankengruppe, Bank of America Merrill Lynch, Deutsche Bank Group, Vestas and Enel.

This is a powerful coalition. Again, Camoron made no comment.

Instead, in his speech he promoted trade as a way to lift developing countries out of poverty without a single reference to the green economy, or sustainable development, or the Rio+20 summit, or climate change or anything else apart from trade.

David Camoron just doesn't get it. He started his premiership giving hope to environmentalists and the green sector, and has been backsliding ever since.

Even his former chief scientific adviser, Sir David King, is incredulous at the missed opportunity deriving from Number 10 and the Treasury's capitulation to pressure from a narrow body of Conservative supporters.

It's not that he's in a country which doesn't understand this stuff. Mexico is so far the only nation in the world other than the UK to have a Climate Change Act, which is similar to the UK's and was passed in April. Like the UK's it requires future governments to meet regular emissions reduction targets, but its goal is ultimately to cut the nation's carbon emissions 50% by 2050, instead of the UK's 80%. Almost one quarter (24%) of electricity must be generated from renewable sources by 2024.

Camoron has not travelled south to Rio de Janeiro for the Earth Summit on Sustainable Development which opens today and is being attended instead by the Deputy Prime Minister, Nick Clegg, and Environment Secretary Caroline Spelman.

Amongst those travelling to Mexico with the Prime Minister were Hugh Richmond, Managing Director of ENER-G Natural Power, plus representatives of Diageo, Rolls Royce, Virgin Atlantic, the Confederation of British Industry (CBI), Chancellor George Osborne and Trade & Investment Minister Lord Green.

Watered down Energy Efficiency Directive still represents a "step change"

Martin Lidegaard, Denmark's energy and climate minister, a keen cyclist, says: "It’s only 17% because that was possible to get"

Britain helped to water down the final text of the Energy Efficiency Directive being finalised today, which will set a new legal target of 17% reductions in energy use by 2020.

Martin Lidegaard, Denmark's energy and climate minister, will today present the final text of the Energy Efficiency Directive (EED), to the Energy Council meeting for ratification.

The European Parliament, the Council and the EU Commission reached a political agreement on the Energy Efficiency Directive yesterday. Today, the Permanent Representatives Committee or Coreper approved it. The European Parliament and the Council still need to give their approval.

If it does, it will be the first time ever that Europe has had a mandatory energy efficiency target.

Securing this has been the Danish Presidency's flagship project during its six-month term, which concludes at the end of this month, and it is pleased to get a resolution. However it is disappointed that the target for reducing Europe's energy consumption will be set at 17% rather than 20% as originally hoped.

In a statement, the European Commission said: “The cheapest energy is the one we do not consume. The countdown to achieve Europe's 20% energy efficiency target for 2020 has started. Without the Energy Efficiency Directive, Europe would only achieve approximately 10% out of 2020. With the legally binding measures introduced by the energy efficiency directive, it is estimated that the EU could reach approximately 17%."

"There have been tough negotiations," commented Lidegaard. “It’s only 17% because that was possible to get. We fought like lions. We started at 13%, and now we have 17%, and that is actually something we are proud of,” Lidegaard said. Since it is a minimum directive, member states can actually go further than 17%.

What the Directive says

The main core of the compromise final Directive is an obligation on energy companies to help their customers save energy. The industry and the energy sector will have a shared responsibility to deliver concrete savings in, for example, energy production, particularly through co-generation and district heating, through building insulation and using energy efficient appliances.

The Directive also requires the public sector to take the lead in the form of requirements for the renovation of state buildings and the promotion of green public procurement.

Under the Directive, Member States must also develop long term renovation strategies for the whole building stock, including policies to stimulate deep renovations.

Its opponents have charged that it could impede growth and that there is no money during the economic crisis to invest in the technology required to save money in the longer term.

Climate Commissioner Connie Hedegaard was today putting a brave face on the deal: "Although the Commission wanted to go much further with our proposal, this deal is an important step forward in our climate efforts," she said.

"The directive will help reduce our dependence on imported fossil fuels, for which the EU paid EUR 573 billion last year, and also create hundreds of thousands of local jobs in Europe. Now it is up to Member States to deliver, and bridge the gap between what was agreed yesterday and our 20% energy efficiency objective."

If all foreseen energy efficiency measures can be implemented within the next decade, every household in Europe could save up to € 1,000 every year.

"This is a big step ahead," Energy Commissioner Günther Oettinger affirmed. "For the very first time we have legally binding energy efficiency measures. Europe is now much better placed to achieve its 20% energy efficiency target for 2020."

But commentators said that instead it is likely to lead to energy savings of 15%.

Britain weakened the Directive

EU sources said it was Britain, not Poland, which was the final obstacle to an improved deal, as it tried at the last moment to weaken a core target.

In the original proposal, utilities were to deliver energy savings equivalent to 1.5% of annual sales from 2014 to 2020. But even after member states had reduced this closer to 1%, British negotiators demanded an amendment that would mean savings from four years before and three years afterwards could be taken into account, which has the effect of exempting it from taking any further action.

WWF-UK criticised the government for "cynically undermining" the Directive, saying that it had "effectively scuppered" the potential for energy savings across Europe.

Friends of the Earth energy campaigner Dave Timms said this was achieved "by opposing an overall binding energy saving target and, at the last minute, insisting on loopholes so it could claim credit for old policies as a way of meeting its future obligation.

"Undermining European efforts to promote energy efficiency while proclaiming the benefits at home is both dishonest and damaging, especially from a self-proclaimed 'greenest government ever'."

The British representation in Brussels declined to comment, but the UK energy secretary, Ed Davey was yesterday claiming credit for the UK in taking a "central role in not only brokering a deal but also increasing its ambition".

"It signals a step change in energy efficiency and for the first time sets legally binding energy saving targets," he said.

"Our experience of our own energy efficiency policies has helped ensure that the Directive promotes practical and cost-effective action that will deliver real savings – and that it strikes the right balance between prescription and the flexibility necessary to allow for national circumstances and for innovative policy approaches.

"The UK supported the move to ambitious, binding, energy saving targets throughout the negotiations and played a crucial role in defining this target so that progress can be clearly and effectively demonstrated."

But Erica Hope from Climate Action Network Europe, said: "Governments have let energy companies off the hook by forcing through a number of exemptions. The Commission must follow-up on this to ensure efficiency measures remain as effective as possible and to prevent abuse of exemptions".

Where the Directive will fail

Paolo Di Stefano of the Coalition for Energy Savings Coalition for Energy Savings (CES) said "The coalition's Gapometer shows that the deal for a Directive would only close half of the gap to the EU’s 20% energy savings target for 2020, as many efficiency measures proposed by Parliament have been watered down significantly".

This half is around 190 Mtoe [mega-tonnes of oil equivalent] of the EU energy saving target of 368 Mtoe by 2020. The coalition calculates that the text agreed would realise around 15% savings by 2020 as follows:

• Most savings result from the annual savings under the efficiency obligations schemes; these will be reduced by up to 25% if actions be for 2014 are taken into account


• Requirements for renovating public buildings and procurement have been limited to central, rather than local, government, which significantly reduces their impact


• Auditing is mandatory, but metering and billing information is now largely voluntary.

"The restriction of public building renovation and procurement obligations to central government reduces them to mere symbolism," commented Jan te Bos, director general of Eurima and Chair of the CES.

New EU efficiency measures in the pipeline, like improved eco-design for boilers and water heaters, or planned, like new CO2 standards for cars, can help to further reduce the gap.

Opportunities for a new business model

Claude Turmes, a Green member of the European Parliament, who has led the parliamentary contribution to the legislation, nevertheless said it represented progress: "We are changing the business model. The future business model of energy companies would also be energy efficiency service business. This is about a cultural business model change and that is why the fight is so brutal."

The cogeneration sector sees opportunities: "With this deal [member states] will not only have to reassess the economic potential for CHP [combined heat and power plants] but will also have to put forward measures to trigger investment decisions," said Fiona Riddoch, Managing Director of COGEN Europe.

The requirements for CHP and improving the efficiency of the energy system are slightly improved over existing rules.

"A competitive market is much better than a regulated market, it is faster and cheaper,” Claus Fest of RWE Effizienz GmbH in Germany told a workshop organised by industry group Eurelectric. “We don’t need anyone to tell us to do energy efficiency, we are doing it right now."

Yet, “the only problem is that we have tried this approach before with the Energy Services Directive, but it didn't work,” countered Brook Riley of Friends of the Earth Europe.

The Prince of Wales's EU Corporate Leaders Group on Climate Change (EU CLG), which represents companies including Alstom, Tesco, Unilever, Philips, Kingfisher and United Technologies, said: “The Energy Efficiency Directive strikes the right balance: it does not place unnecessary or burdensome regulations on businesses, especially where those measures already exist at the national level. Those countries that question the rationale for the Energy Efficiency Directive should think about the impact of doing nothing."

Fatih Birol, the chief economist of the International Energy Agency, repeated his call to EU countries to cease the "absurd" strategies they use to subsidise fossil fuels and adopt the Directive. “Not to push the energy efficiency measures is another way of asking for higher emissions, higher energy import bills and higher energy insecurity," Birol said.

"We all have to push the energy efficiency measures throughout the energy supply chain,” he said. “Europe being a champion of climate change [policies], it needs also to be a champion of energy efficiency.”

"I think member states still have their heads in the sand. The [European] Parliament is doing what it can to oblige member states to face reality and recognise the benefits. But I think the Council will move,” Riley said.

In 2014, the Commission will assess national targets and there will be further measures. In 2016 there will be a review of progress towards the 2020 obligations.

Energy bosses slam Government's energy reforms

Keith Anderson of ScottishPower, Ian Marchant of SSE and E.ON's Sara Vaughan telling MPs the Government is bungling energy policy.

The bosses of the Big Six energy companies have slammed the complexity and pace of energy reforms being proposed by the Government for slowing the rate of investment in new plant which the country so desperately needs.

You thought that it was the Big Six energy bosses who, following extensive lobbying, were getting the proposals for reform they wanted in the new Energy Bill. It turns out that instead, they think that there has been too much ideological and political interference, and far too much delay.

The bosses were speaking to MPs in the Energy and Climate Change Committee during its first evidence session on the Draft Energy Bill, which contains the Government's proposals for electricity market reform and Contracts for Difference (CFDs). MPs want to know if these financial tools are effective particularly in supporting renewable energy and carbon capture and storage (CCS).

Keith Anderson, CEO of ScottishPower, told MPs that “this country used to be a fantastic place to invest in for energy because everyone had faith and trust that it was done in an evidence-based way". But this is no longer the case, and it is causing uncertainty and a hiatus in investment.

He spoke of the “massive amount of work" that was done in providing evidence during the lengthy consultation on the banding review for the Renewables Obligation last year, that came up with a lot of recommendations for the future.

“But then, since October, what we've seen is an awful lot of noise from politicians and in the media, and speculation about arguments between government departments that there will be political influence over the outcome of that consultation that it is not evidence-based, and this damages investor confidence."

Anderson called for more clarity, speed and confidence to be given by the Government. “There's a huge opportunity now for the UK to go out and grab a huge proportion of investment for renewable energy. Given the slowdown in our economy and in other countries I think right now is the time for the UK to put in place a very clear, long-term and robust framework," which should be “used to regenerate the economy".

However, he said that there is still a lot more detail required in the Bill, particularly on Contracts for Difference, and this was prolonging uncertainty amongst investors.

John McElroy, director of policy and public affairs at RWE Npower, agreed that as it stands, the Bill will not provide the confidence that investors need and requires a lot more work. "At the very least investors need to know how the capacity mechanism will work and when it will be triggered," he said.

“What we really want to see is the timetable moving forward and the government getting on with it," added Sara Vaughan, Director of Regulation and Energy Policy at E.ON. "There is already some slippage because we expected the bill to be introduced in May and it is now not going to be introduced till probably the end of the year," which will delay the secondary legislation as well “and that causes concern".

Carbon capture and storage

On CCS, Ian Marchant, CEO of SSE, said, frankly: “We do not know that this technology will work" and so developers "crucially need capital support at this stage to move beyond the demonstration phase".

He said that Government energy policy is predicated on assuming that it will work, but this is currently unknown.

Support for wind power

Anderson said finding investment for wind farms was more difficult in the UK than abroad because planning permission takes longer, land rental is more expensive and development costs are higher than elsewhere.

On the level of support for onshore wind, Marchant agreed that this should come down as costs reduce, and said that he doesn't get involved in bilateral discussions about the level of support. He said that he didn't like the way that discussions on nuclear and renewables were being conflated. “I do not believe that the returns being made on renewables are excessive" he added.

Call for more evidence

The Energy and Climate Change Committee, which today is on a fact-finding mission to the London Array and Gunfleet Sands Windfarms, has issued a call for evidence from the public on the economics of wind power, to be submitted by 27 June; there is to be a hearing on 10 July.

Tim Yeo MP, Chair of the Committee, said: “Government policy on wind power should be based on sound economics and engineering, not political pressure from a small vocal minority – whether that be green campaigners or anti-wind protestors.

“In this session we want to cut through all the hot air talked about wind power and examine whether the economics really add up. Wind farms are over forty times less polluting than gas burning power stations - per unit of energy produced - but there are concerns about the costs to consumers.”

Contracts for Difference

All the energy bosses agreed that they were in favour of Contracts for Difference because, unlike the Renewables Obligation, although it had many advantages, they will be able to support the massive increase in investment in renewable energy that is required in the coming years.

John McElroy agreed the Electricity Market Reform was too complex, and was taking too long to understand and finalise.

Sarwjit Sambhi, Director, Finance and Strategy at Centrica, owners of British Gas, said that the capacity payment was good for gas-fired generation, which was required in the medium-term.

Government “dishonest” on nuclear power

Marchant criticised the Government for trying to disguise their support for nuclear power, in doing so coming up against state aid rules, and called for “an honest and open discussion about whether the country needs it and what is the cheapest way of doing it as opposed to disguising it in a very complex set of proposals, so it actually doesn't have negative connotations."

Marchant described investment in wind power as much more manageable than in nuclear power, and preferable because it has a period of clean construction of two or three years. “Nuclear is a completely different animal. You have billions of pounds of investment and a build time of seven to ten years."

The MPs were also questioning whether there was enough provision for reducing demand for electricity in the Bill and the level of and exemptions to the proposed Emissions Performance Standard.

Green Deal will be a lame duck: Government sets out its unambitious terms

Ed Davey, Energy Secretary, learning how to insulate solid walls. Some think he should take this up permanently...

The Government has set out the parameters of the Green Deal energy efficiency scheme, which have been met with a muted response from the industry and consumer groups.

The proposals outline the secondary legislation to be enacted, the expected extent of the work that will be undertaken, and new measures to strengthen consumer protection, reduce industry burdens, and implement the Energy Company Obligation (ECO).

But DECC confirmed that it now expects the Green Deal to take up to 18 months to get going. Its introduction "will happen gradually, building towards a 'natural peak' in the spring and summer of next year", DECC says. “Functionality will be phased in, with collection of the Green Deal charge beginning early in 2013."

The Green Deal for business will launch alongside the domestic Green Deal as had been originally planned.

DECC says the scheme will cost around £17.3 billion over ten years and bring £25.6 billion of benefits. The ECO (mandatory fuel poverty action) alone is expected to prevent the emission of 27.8 mega tonnes of carbon dioxide over two years.

The list of eligible measures has been extended from 30 to 45 measures, with fewer solid wall and more cavity and loft insulations expected than were in the original consultation. However, the annual rate of loft insulation will be substantially less than it has been in the past few years.

As a result, the Impact Assessment accompanying the proposals says, "job losses from parts of the cavity and loft insulation market are likely".

Despite this, the Secretary of State for Energy, Ed Davey, said he believes the Green Deal "has the potential to support up to 60,000 jobs in the insulation sector alone, more than doubling the number of jobs in the sector, and making a real contribution to green growth".

For comparison, 4,700 installers were employed in the insulation market in 2007/8, which covers loft and wall insulation, and another 22,000 in the wider supply chain.

"We have listened very carefully to what industry, consumer groups and other organisations have told us," Davey said in a statement. "Broad support for a managed, tested and careful introduction of the Green Deal fits exactly with our objective to provide an excellent customer experience from day one and a market where a range of new players can readily participate."

However, speaking for consumers, Audrey Gallacher, Director of Energy at Consumer Focus, said: "We are concerned that the Government has still not outlined further steps to stimulate consumer demand for the Green Deal. Without clear incentives to attract consumers, such as council tax or stamp duty discounts, we are worried that people won’t see the benefit or relevance of the scheme to them."

He added that “much more needs to be done" to help the vulnerable in society, “given the millions of pensioners, families and disabled people struggling to afford to heat their homes" and proposed that the Government should use some of the revenue that it will receive from carbon taxes "to get help to those who need it."

The Impact Assessment says that it expects that the average saving per household on bills will be £50-60 per year by 2023. But with work costing up to £10,000 per household this would take 200 years to pay off at this rate, allowing for absolutely no saving on the bill for householders. It is only designed to operate until 2030.

Ministers have always said that the customer will experience reduced bills and at the same time be able to pay off the loan taken out to finance the energy efficiency measures from further savings on the bill.

But customers with bills lower than the national average may find that their repayments will be higher after a Green Deal than previously, the impact assessment says. This is because at the heart of the Deal is the Golden Rule, which limits the amount of finance that can be attached to an electricity bill, and which is based on average energy users' bills. Green Deal Providers had been told that they must now obtain a written acknowledgement of customers' awareness of this before work can take place.

The impression of financial chaos is underlined by the decision a few days ago by some business leaders from the Green Deal Finance Company to suspend work. Kingfisher, British Gas, Willmott Dixon, Carillion, Marks & Spencer and Travis Perkins are amongst those who have written to senior officials complaining that a lack of funding is hindering their work. They are calling for £40m in start-up funding to cover initial construction and early operating expenditure and a further £260m from the Green Investment Bank to secure access to capital market funding. At the current rate they say they won't be in a position to lend money until well into next year.

Rhian Kelly, CBI Director for Business Environment policy, commented that: "the Government needs to move quickly to put everything in place. It must ensure that businesses who want to get involved are in the best position to do so and put the right policies in place to stimulate consumer demand."

The main thing is the money. As Nathan Goode, Grant Thornton's Head of Energy, Environment and Sustainability, observes: "Virtually nothing is said about the Green Deal Finance Company, other than a general statement alongside other possible options in the framework document, while an answer on the disbursement of the early adopter money is postponed until later in the year. The role of the Green Investment Bank appears still to be unresolved."

The Government has still not decided how to spend the £200 million allocated in the Autumn Statement to encourage early uptake of the Green Deal. With only four months left to go till the scheme is scheduled to start, this has raised some criticism, not least from the group of Pioneer Green Deal providers who signed a Memorandum of Understanding with DECC to start work early.

Nevertheless, DECC is estimating that between £1.1 and £1.3 billion will be lent to householders by 2015.

Greg Barker tweeted optimistically: "Full steam ahead #GreenDeal but the roll out from the autumn will be very carefully managed so we grow from strong foundations".

His enthusuiasm is not shared by fellow MPs, less than half of whom have indicated that they will promote the uptake of the Green Deal, in a survey conducted by Velux, Land Securities and the Glass and Glazing Federation. The survey of 100 MPs found that more than a fifth (21%) were unlikely to promote the scheme, 20% said they were neither likely nor unlikely to champion it, while 11% were still unsure.

What will it finance?

The Impact Assessment estimates that up to one million solid wall insulations will be completed by 2022. It also estimates that 1.2 million easy to treat cavities will be filled out of the current potential of 2.6 million. Including loft top-ups of around a quarter of the six million potential and the non-domestic sector’s abatement, this contributes 9 MtCO2 of savings within the second Carbon Budget period and a further 16 MtCO2 to the third.

Just 364,000 loft insulations are envisaged up to 2015. This contrasts to 800,000 that were installed in 2009, 540,000 the following year and 870,000 last year. The full total envisaged by 2022 is just 1.7 million.

Either added to this or included within this is, “an extra 540,000 lofts and cavities" to be filled in “hard to treat cavities (and lofts if bundled with them)” under the ECO.

DECC's argument for this reduction in the number of loft insulations is that the cost of these measures has now come down, as a result of previous subsidies, in the same way that the cost of solar photovoltaic installations came down, and so requires less subsidy. This is in comparison to other energy-saving methods in the home such as external wall insulation.

However, very few external wall insulations are likely to be conducted under the scheme, as the payback period is typically far too long. What would make sense is that the measures which secure the most money and carbon saving for the least amount of expenditure should be implemented first. These are the quick wins, like topping up loft insulation and the still unfilled cavity walls around the country.

Protection for customers

Some consumer protections have been tightened as a result of the consultation, but other burdens on Green Deal Providers have been removed to save them money.

Among the protections are that Green Deal Assessors will have to tell customers before they visit whether they are independent or tied to a particular provider, and how and how much they are paid.

However, cold calls will still be allowed, but customers will be permitted a cooling off period of at least one day after a cold call has been made and before the assessment is carried out.

It is confirmed that the interest rate charged on the loans would be at a fixed rate for simplicity's sake and to allow consumers to hedge against future energy prices. However providers can increase the whole charge by 2% a year, in line with the inflation target of the Bank of England, which will “allow them and customers to capitalise on some of the expected increase in savings due to expected fuel price inflation”. This will be set at the outset of the deal.

The whole process will be overseen by a separate Green Deal Ombudsman and Investigation Service, the details of which will be announced shortly.

The ECO

Energy suppliers with more than 250,000 customers will be required to take part in the ECO scheme. This will involve spending £1.3 billion a year on three obligations, rather than the two originally proposed: Affordable Warmth, Carbon Saving Communities and Carbon Savings. They will be administered by Ofgem.

The new element, the Carbon Saving Communities Obligation, is designed to target insulation measures in the bottom 15% of low-income communities, 15% of which will be targeted at rural, low income households.

This was hailed by the National Housing Federation. But its policy leader Pippa Read added that the Government should "think again about the continuing exclusion of social landlords from one pot of funding for fuel poverty, and to simplify the process of securing consent for work in blocks of flats".

Under the Affordable Warmth Obligation, any measure will be eligible for support if it reduces the notional cost of heating the property.

District heating will be eligible under the ECO Carbon Saving obligation when connections are delivered as part of a package that also includes SWI or non-standard cavity insulation.

For providers

Already, a full set of National Occupational Standards has been finalised, enabling qualifications to be developed, and the Green Deal Installer standard (PAS2030) has been published, which controls the processes and the quality of service the customer can expect before, during and after the installation.

The Green Deal Register will open in early August 2012, and accredited certification bodies can then begin applying for the power to be able to certifying assessors and installers. It will be administered by the Registration and Oversight Body, which will overlook the process.

All assessors and installers who want to be Green Deal authorised should contact the appropriate certification body to find out how they can become certified, a list of which can be found on the DECC website.

One provider, Garry Worthington, Head of Green Deal at Climate Energy, said: "we are disappointed that the Government remains undecided about its £200m fund to kick-start the scheme". He called the current plans to use this purely as a cash-back incentive over the next two years "misguided" and said they should "be used much more creatively to support regional schemes, local innovations, jobs, communities and delivery to give take-up an initial boost.

"We would also urge DECC to reconsider its support around promoting Green Deal and creating awareness of the scheme."

All in all, it looks as if the Green Deal will be a light, rather than dark shade of green.

Onshore wind is economic and viable: independent report for MPs counters myths

An independent report on wind farms produced for MPs has concluded that the downsides of wind farms are often exaggerated by their opponents, who have recently stepped up their lobbying of parliamentarians.

The new policy brief on ‘The case for and against onshore wind energy in the UK’ is being distributed this week to every UK Member of Parliament and will be launched at the House of Commons on 13 June. It comes from the Grantham Research Institute on Climate Change and the Environment, which is chaired by Lord Nicholas Stern, author of the 2006 Stern Review, and located at the London School of Economics.

It finds that wind turbines are not too unreliable or expensive to contribute significantly to Britain's electricity generation mix, and that it is wrong to think that gas is a useful relatively low carbon fuel.

Last week, George Osborne indicated he would like to see the subsidy for onshore wind cut by 25%, and David Cameron sealed a deal with Norway that favours the use of gas in the UK electricity generation mix. DECC’s proposals for electricity market reform also would, if implemented, lock the UK into heavy reliance on gas-powered generation until 2045. None of this is good news in the struggle against climate change.

"It is not a choice between onshore wind and fossil fuels," the LSE report concludes, however. "Once the implications of the UK’s carbon targets are recognised, the issue of onshore wind becomes a choice between this and other low-carbon energy sources. A second robust lesson is that many low-carbon technology combinations are technically feasible."

The Grantham Institute's Bob Ward, speaking to EAEM on behalf of its authors, Samuela Bassi, Alex Bowen and Sam Fankhauser, said that they looked at the claims most frequently used by anti-windfarm lobbyists. “When these claims are scrutinised", he said, "they do not stand up to analysis".

There are three myths commonly repeated in anti-windfarm rhetoric:

Myth 1: that there is a requirement for gas-powered backup to counter the unreliability of wind power. “This is plainly untrue," said Bob Ward. “Only 1% of carbon savings are wiped out, because there are many ways of managing both demand and supply due to the intermittency of the wind." The report says: "The cost penalty and grid system challenges of intermittency are often exaggerated. There are several other ways of compensating for the variability, such as bulk storage of electricity, greater interconnection, and a more diversified mix of renewable sources, as well as measures to manage demand, like smart grids and improved load management.”

Myth 2: that onshore wind is expensive. “We found that it is the cheapest of all low carbon forms of electricity generation," said Bob Ward. The report says: “A key attraction of onshore wind over other low-carbon forms of electricity generation is cost. In terms of levelised cost – an economic measure which takes into account all of the costs of a technology over its lifetime – onshore wind is currently the cheapest renewable technology in the UK. The choice between more affordable electricity (which would favour onshore wind) and local environmental protection (which may favour other low-carbon technologies) is ultimately a political one."

Myth 3: that using gas power generation is low carbon and will help us meet our climate commitments. “This is only true if we stop using gas in 2020," said Bob Ward, because at that point emissions need to drop further than relying on gas can permit. The report concludes: "It is clear that the further decarbonisation required in the 2020s cannot be achieved by heavily relaying on unabated gas power stations. Rational policy-makers need to anticipate this and avoid locking in high-carbon electricity generation.”

“The thing is," continued Bob Ward, “those who have an agenda against wind farms then seek to find proof to back it up. They twist the evidence to make it fit."

He says he finds the same misinformation cropping up again and again in anti-windfarm rhetoric. It gains credence by being repeated so often, for instance by the Global Warming Policy Foundation, the new Welsh group No To Wind and in the letters written by a hundred Tory MPs recently to George Osborne.

“Concerns about the local visual and environmental impact wind farms are legitimate," continued Mr. Ward, “and they shouldn't be situated anywhere. That is why Tim Yeo was correct to point out last weekend that we should be copying Denmark and Germany and letting communities receive the benefits to which they are entitled of having a wind farm nearby".

The report therefore recommends a number of regulatory measures “that can help to encourage onshore wind developments where they make sense and prevent them from happening where they do not.” These are:

• A clear price for carbon that favours the relative merit of wind and other low-carbon forms of power production compared to hydrocarbon-based fuels
• A planning system that reduces the costs and uncertainties to project developers, factors in local environmental concerns and prevents developments in important environmental areas, and ensures appropriate benefit-sharing in the local community
• measures to ensure that the electricity system can cope with intermittent resources.

The latter include: smart transmission and distribution systems, interconnection to other energy markets, energy storage, load management and flexible demand measures, as well as appropriate combination of fossil fuel (ultimately linked with carbon capture and storage) and renewable sources to ensure balancing and the ability to meet peak demand.

Greater support for research and development into new forms of energy storage was recently called for by the Institution of Mechanical Engineers.

And a new, promising form of storage specifically aimed at windfarms recently received $15 million of backing from Bill Gates, Khosla Ventures and energy company Total. The Liquid Metal Battery uses common raw materials and is the brainchild of MIT's Donald Sadoway.

For sale: neglected planet; one previous, careless, owner.

Yesterday I went to a special award ceremony, to celebrate the winners of a poetry competition, that has been judged by Britain's Poet Laureate Carol Ann Duffy and Elin ap Hywel. It is on the theme of climate change.

Many of the winning poets were there, there were readings by Susan Richardson, Elin ap Hywel, Dafydd Wyn and Emily Hinshelwood, and a collection of 40 of the poems, entitled And This Global Warming, was launched. The picture above is on the cover. It is the second year of the competition, and it attracted a whopping 672 entries.

Carol Ann Duffy said that the quality of the entries “was fantastic, especially the children's entries" (there is a separate section for children).

The poems describe anger at politicians, the desolation of forest fires, a poignant memory of ice, the absurdity of an estate agent's spec on the earth, and the personality of thunder. They make you laugh, cry, smile and, of course, they raise anger at what is being done to the Earth in our name and our seeming incapacity to do anything about it.

Sadly, one of my own poems is not included! I console myself at the thought that I can praise the work of these other poets, who all deserve to be widely read.

And I want to mention especially the organiser of the competition, Emily Hinshelwood and her partner Dan McCallum. The battle to preserve communities, fight climate change and support renewable energy has many unsung heroes around the world, and this couple are among them.

For, 14 years ago, they began to set up what quickly became a thriving community project, Awel Aman Tawe, to regenerate a former coalmining area in the Swansea and Amman valleys in South Wales. They have fought and won many battles, not the least of which is to build a community-owned wind farm on the hillside overlooking the town.

It has taken over 10 years to get this through planning, and it is still not quite there. The project has shrunk from an original six turbines to just two, despite strong grassroots support. The perseverance and commitment to achieve this is awe-inspiring.

Emily believes in the power of art in its widest sense to inspire people. She knows that touching people’s lives can never be done with technology or economics alone, or even at all. So Awel Aman Tawe has run a broad programme of arts activities specifically themed around climate change. She sees the arts "as an opportunity to engage local people in what can be a controversial and unpopular subject".

The programme encouraged people to imagine the reality of many different aspects of climate change using a range of media including film, animation, poetry, printmaking, design, collage and performance. The performance was a play called Nine Meals from Anarchy, themed around food transport. Another project was Postcards from the Future in which participants in different communities were invited to design postcards depicting their image of the future to send to people in the present.

Climate change can be a difficult subject to get across. It feels impersonal, distant both in time and place. How can we make it relevant to people's lives? How can we break through the filters of indifference, ignorance and cynicism?

I feel that the best efforts come when you cut straight through to the emotions, the things that people hold precious in their lives, or when you can make people laugh, because laughter bypasses our normal, cynical, so-called rational prejudices. Art helps to shock people into seeing things in a different light.

So, I'll devote the rest of this column to someone else's words, one of my favourite poems from the collection, by Richard Foreman. It's called 'For Sale'.

quiet location on spiral arm of the Milky Way
well presented, detached planet
seven spacious and charming continents
set amidst rolling, cerulean oceans
heating system in need of some renovation

ideal first time investment for extra-terrestrial species
with suitable technology and know-how
to stem a rampant excess of carbon dioxide
methane, nitrous oxide, ozone...
the whole, roiled gamut of greenhouse gases

fantastic opportunity to restore
depleted, misused, natural resources
scattered fragments of once vast rainforests
homelands engulfed by rising seas
and the vestigial remains of polar ice-caps

potential to update and extend
vastly depleted wildlife species
compromised attempts to establish
sustainable industries, renewable energy supplies
and responsible agricultural development

this planet enjoys an elevated position
with outstanding, panoramic views of the universe
an elegant world, with versatile accommodation

previous owners
now deceased

You can probably buy copies of And This Global Warming here, and support this valuable project.

Deal with Norway guarantees future UK gas and oil dependency

Øyvind Eriksen, executive chairman of Aker Solutions, Norwegian Prime Minister Jens Stoltenberg and David Cameron discussing the deal in a side street in Oslo, Norway.

The Norwegian and British Prime Ministers yesterday agreed several landmark energy partnerships between the two countries designed to secure long-term energy supplies.

The deals will further increase UK dependence on gas and oil for decades to come, including committing it to tapping reserves in the Arctic that are opposed by environmentalists. They will also support the development of offshore wind and, it is hoped, carbon capture and storage. Finally, they continue to support a grid interconnector between the two countries, allowing the UK to import geothermal power.

The deals were sealed at a breakfast meeting in Oslo with Prime Ministers David Cameron and Jens Stoltenberg that was attended by ten leading energy companies from both countries: Fred Olsen, Gassco, Aker Solutions, National Grid, NorthConnect, Shell, Statoil, Statnett, Statkraft and Centrica.

Billions of pounds of new investment are expected to result, with the potential to create thousands of new jobs. The agreements include the creation of:

• 300 jobs from Statoil's £12 billion investment over the lifetime of oilfields in the UK's Mariner-Bressay North Sea
• 1300 jobs in the oil services industry created by Norwegian firm Aker Solutions in Chiswick
• continued cooperation on gas supply and exploration between Centrica and Statoil, sealed in a new Memorandum of Understanding
• a promise to develop the 9GW Dogger Bank offshore wind farm off the East coast of Yorkshire by the Forewind Consortium
• a deal to provide more Norwegian gas to Shell from Gassco
• continued progress on installing two subsea electricity interconnectors to provide geothermal electricity between the UK and Norway.

Prime Minister David Cameron said of the Norway-UK Energy Partnership for Sustainable Growth: "The jobs and investments announced today highlight how vital the strong relationship between Norway and the United Kingdom is for our energy security and economic growth. We look forward to strengthening our partnership further, driving investment into a diverse, sustainable energy mix that delivers affordable long term supplies for consumers."

Norway is already an important supplier of oil and gas to the UK, providing over a quarter of the UK's primary energy demands: 42% of imported gas and 62% of imported oil in 2011. Charles Hendry, Energy Minister, added that: “The investments and jobs announced today by British and Norwegian companies are a clear signal of the benefits of this partnership.”

The agreement says that oil exploration on the Norwegian and the UK continental shelves “will continue to provide substantial energy supplies for the coming decades". Included in this is the ability to use new technology to improve recovery from mature fields and from the Arctic.

Carbon capture and storage

The statement continues: "The UK is currently developing a gas generation strategy, setting out the role for gas-fired power in delivering a secure and affordable route to a low-carbon economy. CCS will enable gas to provide substantial electricity consistent with our climate change agenda."

Norway is leading the world in this technology; it has been burying carbon dioxide there since 1996. Last month, Norway's Prime Minister, Jens Stoltenberg, opened the next stage of the world's largest prototype carbon capture and storage plant at an oil refinery and gas power plant at Mongstad, that is financed by the Norwegian government to the tune of $1bn.

The United Kingdom, however, like the rest of Europe, is lagging behind Norway and other countries such as America, Canada and Australia, all famous for the size of their carbon footprints in implementing CCS. The main reason is the low price fetched for a tonne of carbon released into the atmosphere under the European Emissions Trading Scheme, roughly one tenth of the cost of burying it back in the ground.

David Cameron hopes that we can learn a thing or two about CCS from the Norwegians to improve the prospects of the fledgling CCS projects here in the UK.

However, with the proposed emission limits of 450gCO2/kWh for Emissions Performance Certificates for new gas-fired power stations in the new Energy White Paper, it is hard to see that there will be any regulatory incentive to capture carbon from these power stations.

Arctic oil and gas

Because of the agreement, Britain will have no shortage of oil and gas in the years to come. Norway is ranked 13th amongst nations with gas reserves. Major new discoveries of oil and gas have been made recently in the Norwegian Continental Shelf, in the Skrugard and Havis fields in the Barents Sea, and the Johan Sverdrup in the North Sea. Aker Solutions has recently been awarded contracts by Statoil for exploring these. The Barents in particular is a harsh, Arctic environment.

But exploration in the Arctic faces severe opposition from environmentalists. Greenpeace calls it “a catastrophe waiting to happen" and is mounting a big campaign, fronted by Jarvis Cocker, who recently visited the Arctic Circle and was reportedly moved to tears at the region's majestic landscape.

David Cameron did not have time to do any sightseeing. In the joint statement is the claim that coming Electricity Market Reform will create a "framework for investment in the UK" worth "over £200bn in energy project opportunities. Similarly," it continues, “Norwegian policies are creating new commercial opportunities for companies, particularly in the High North," a reference to the Barents Sea discoveries. "The Norwegian-Swedish Green Certificate Scheme also offers incentives for British investors in renewable energy," it adds.

This scheme was launched on 1 January 2012 and is a market-based system to support the expansion of electricity production from renewable energy sources and peat. Since then 12,573 green certificates have been issued in Norway in relation to 26 plants.

In Norway, Statoil, which is 67% owned by the Norwegian government, is facing stiff opposition from the public, church leaders and 28 Norwegian organisations including WWF Norway and Greenpeace Norway, for having chosen to get involved with tar sands.

Wind farms

As for the renewable energy projects, the largest of these is the Dogger Bank one, which comprises up to four offshore wind farm projects, 156km off the coast of Teesside, which could provide over 10% of the UK's energy needs

The windfarms will be connected by onshore high voltage direct current (HVDC) underground cabling and up to four direct current (DC) to alternating current (AC) converter stations. A local consultation is currently underway.

The Forewind consortium managing the project is comprised of the Norwegian companies Statkraft and Statoil, German company RWE npower renewables, and Scottish company SSE.

Finally, the Norwegian-UK agreement says that "The UK and Norway will work together to build on outcomes of the Rio+20 Conference, including further development of the Energy+ Initiative to increase clean energy access for developing countries."

The next step is a conference to discuss the achievements and future priorities of the UK-Norway energy partnership, to be held at London’s Royal Geographical Society in September.

Car manufacturers to get new targets that will cut driving costs

Moustaches in the driving seat: Siim Kallas, Vice President of the EC in charge of Transport (left), and Dieter Zetsche, Chairman of Daimler AG and Head of Mercedes-Benz Cars, at yesterday's CARS 21 group meeting.

The European Commission is next month to propose tighter carbon emissions standards for new European cars with a 2020 target of 95gm CO2 per kilometre, that will cut costs for motorists by 25%.

But the Commission has not decided whether to make the target binding, and there are calls for the target to be even stiffer in order to save drivers even more on fuel costs.

Currently, manufacturers have to reach a binding target of 130gm CO2/km by 2015, which they are on target to attain. Fines for failure are presently €95 for every gram over the target per vehicle and these would be kept at the same level in the future.

Long-term carbon dioxide emission standards for new passenger cars, for 2025 and 2030, are also envisaged by the Commission. These would be set by the end of 2014 at the latest.

The new limits would cut fuel consumption in cars and vans by up to a quarter and save European citizens an estimated 25 billion euros ($31.2 billion) per year, as we reported last month. The estimated fuel savings from implementing the 2020 target would more than compensate for the expected cost of compliance.

The average motorist would save around €500 per year on fuel from the 95 gram 2020 target, based on a driving distance of 20,000 km per year and a fuel cost of 1.4 euros per litre.

Greg Archer, programme manager at the Transport and Environment campaign group, welcomed the news, but said that drivers should be helped to save even more. "Drivers have been short-changed," he said. “A 2020 target of 80g CO2/km is perfectly attainable."

The European Commission is currently assessing the feasibility of a 70gm CO2/km target by 2025.

In an interview in Der Spiegel people last December, Guenther Oettinger said "German automakers will have to fight hard [to meet the new emissions targets], but they will meet them".

But they will not have to fight that hard, being already well on the way towards meeting the 2015 target. According to the Society of Motor Manufacturers & Traders (SMMT)'s report on new car CO2 emissions, last year average emissions had fallen to 138.1g/km, down 4.2% on 2010 and 23.7% below the 2000 average.

Low emission cars are gaining market share

Lower emission, cheaper to run cars are also becoming more popular. In 2011, registrations of alternatively-fuelled vehicles rose by 11.3% to over 25,000 units, and accounted for a record 1.3% share of the total market. All market segments reported a further decline in CO2 emissions in 2011, highlighting the broad nature of the total market shift to more efficient cars.

The SMMT says that the continuing challenging economic situation has increased consumer awareness and the desire to reduce running costs by purchasing lower CO2-emitting cars.

While the UK has to comply with emissions standards set at the EU level, it has also introduced its own complementary policies to incentivise the uptake of low-carbon vehicles. These include a plug-in car grant scheme, a fund of over £300 million, which offers motorists up to £5,000 for the purchase of cars with tailpipe emissions of 75g CO2/km or less. A similar grant has been created to encourage the purchase of ultra-low emissions vans. However, take-up of this has been low so far.

British consumers and businesses also benefit from a favourable tax regime, with plug-in vehicles receiving Vehicle Excise Duty and Company Car Tax exemptions, as well as Enhanced Capital Allowances.

Furthermore, the Plugged-In Places programme has made £30m available to match-fund eight pilot projects installing and trialing recharging infrastructure in the UK to support the Carbon Plan commitment to install up to 8,500 charge points.

Support for the automotive industry

Although in the UK, the auto market is doing surprisingly well given the recession, the story is not the same across the whole of Europe, where altogether it supports 12 million jobs, a €92 billion trade balance, and receives €30 billion investment in R&D.

So yesterday the European Commission announced a series of actions to support the industry, with a proposed action plan that will include providing EU financing for research, in particular to help the sector adapt to the technologies of tomorrow, through reinforcing European Investment Bank lending.

It will also help to manage business costs by applying smart regulation, and improve exports through trade negotiations and work on global regulatory and procedural convergence with the ultimate aim of achieving the approval of a worldwide car type. This would mean that any car produced in the world can be marketed in every country of the world.

Also yesterday, members of the CARS 21 High Level Group, which consists of ministers and senior industry representatives, met for the final time and approved a report which sets out a complete vision for the automotive industry in 2020.

It calls for, amongst other things, support for the development of "a portfolio of propulsion technologies, dominated by advanced combustion engine technology, that would be increasingly electrified. In addition, the deployment of vehicles with alternative powertrain concepts (such as electric and fuel cell vehicles)".

Parallel to this they also called for "appropriate refilling and recharging infrastructure for alternative fuel vehicles" to be built up, "in line with their market potential".

European Commission Vice-President Antonio Tajani, responsible for Industry and Entrepreneurship, said: "The automotive industry needs to be in good shape first in order to realise this vision. We therefore need to act now and decisively in order to counter current economic difficulties by mobilising financing for research, carefully evaluating any new regulation and supporting the expansion on third markets”.

The future for low emission vehicles

This is still largely driven by European legislation, although high fuel prices and concerns about climate change are playing a large part, especially outside of Europe.

Under the 2009 Renewable Energy Directive, fuel suppliers are required to source 10% of their transport fuel from renewable sources (although this policy has been met with controversy due to concerns over unsustainable biofuel cultivation).

One in four business leaders have already making use of, or are considering introducing, alternative fuel vehicles to their business operations, partly as a response to oil prices remaining stubbornly high, according to a report last month from Grant Thornton. This finds that 24% of businesses globally are looking to alternative fuel vehicles, such as electric cars, hybrids, LPG and fuel cell cars, to help mitigate rising transport costs.

The survey covered 12,000 businesses per year across 40 economies, finding also that the price of oil prices was the leading cause driving business owners to consider alternative fuel vehicles, for 69% of survey respondents globally.

The drive towards clean alternatives is being largely steered by mature markets, with 28% of businesses in the G7 at least considering adopting such vehicles, compared to just 15% in the BRIC economies.

55% of businesses cited tax relief and 62% cost management as key motivators for switching to low emission vehicles. Businesses are also increasingly aware of the environmental impact of their fleets with 58% citing saving the planet as a driver towards the adoption of alternative-fuel vehicles.

Amongst those who have not considered alternative fuel vehicles, cost (49%) emerges as the greatest constraint, closely followed by the difficulty of charging/refuelling (48%) and a lack of choice (38%).

The trend toward alternative fuels is also visible in global sales of hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs), which are projected to reach 5.4 million vehicles by 2021 (more than 6% of the automotive market).

But a recent KPMG report found that electrified vehicles will not exceed 15% of annual global new car registrations before 2025, because of cost and lack of charging infrastructure; for the immediate future, hybrids will continue to be more popular than pure battery-powered cars.

Over time, fuel cell vehicles are seen as a more promising prospect than battery-electrified cars, especially in the BRICs countries. They find that 9–14 million new electric vehicles will be registered in TRIAD and BRIC markets by 2026.

Commission calls for liberalised energy market and 2030 targets for emissions reduction

 European Energy Commissioner Günther Oettinger

The European Commission has called for continent-wide 2030 goals for carbon emission reduction to be set as soon as possible in order to promote investment.

Any agreed milestones “should enable renewable energy producers to be increasingly competitive players in the (liberalised) European energy market," a statement said. The document examines four different possible scenarios.

To reach the current 2020 targets, of 20% of electricity supplied from renewable sources, Member States have rapidly to implement their national plans and double investment in renewable energy to €70bn. However, the lack of certainty on the direction of future policies beyond 2020 is perceived to be hindering this process.

The statement proposes that renewable energy such as solar and wind power should be generated wherever they are cheapest on the continent, but that no overarching European goal should be set for the amount to be generated. Instead, goals for renewable energy, energy efficiency and greenhouse gas emissions would be set at a national level. This would mean that the main instrument for cutting carbon emissions and encourage investment in renewables would be the EU Emissions Trading Scheme (ETS).

Subsidies for renewable energy would be gradually withdrawn as they become cost-competitive with other sources of electricity and heat. Support schemes should also be consistent across Europe, to avoid unnecessary barriers.

"We should continue to develop renewable energy and promote innovative solutions. We have to do it in a cost-efficient way," said Energy Commissioner Günther Oettinger.

The Commission repeated its backing for an integrated market and a pan-European grid that would connect to large solar and wind farms in Northern Africa. Morocco already has an aim of generating 40% of its electricity from solar by 2020. The Commission foresees an increased use of the cooperation mechanisms contained in the Renewable Energy Directive, which allow Member States to achieve their national binding targets by trading renewable energy between them.

Greater cooperation is particularly called for in the Mediterranean. "An integrated regional market in the Maghreb would facilitate large-scale investments in the region and enable Europe to import renewable electricity," the statement says.

Oettinger wants agreement on a new policy regime before he leaves post along with the rest of the Commission officials in 2014. “Without a suitable framework (after 2020) renewable energy growth will slump,” he warned.

Liberal Democrat MEP Graham Watson supported the call for a single, liberalised energy market and consistency across Europe. "More trading of renewable electricity within the EU is exactly what we need,” he said. “We all need to be importing and exporting our renewables. The sun is always shining and wind always blowing somewhere in Europe, and a single market for renewables will make the green energy switch work."

But he cautioned that this would not happen without investment in new high-voltage direct current grid infrastructure, and the budget for this is currently under threat. "The next EU budget is due to put €9bn towards cross-border energy links, but that money is being squeezed," he said.

The Commission's energy infrastructure package estimated that about €100bn is needed for new electricity transmission lines alone. The creation of the single market, the introduction of new technologies, market players and ancillary service providers, all depend on the construction of new infrastructure and the implementation of the smart grid.

Hans ten Berge, the secretary general of Eurelectric, the association representing Europe’s electricity industry, reacted to the statement by calling for “a level playing field for mature RES and other generation technologies", and consistent policies to be applied under the EU ETS. "With technologies like onshore wind and solar PV reaching maturity, Europe must integrate renewable energy into the market," he said.

However, many in the industry think that there should be a binding target for renewables for 2030 just as there has been for 2020, because without it there would be no guarantee of realising the aims of the overarching EU 2050 carbon reduction target of 80-95% and the EU Energy Roadmap 2050.

The Coalition of progressive European energy companies, which represents SSE, Eneco, DONG Energy, EWE, Acciona, Sorgenia, PPC, EDP Renewables and Stadtwerke, said this “is needed to bridge the policy gap between 2020 and 2050 and to allow the renewables industry to mature and to reach cost competitiveness."

"European Ministers must turn this message into action and back a renewable energy target for 2030, as supported by the Strategy's Impact Assessment", added Stephane Bourgeois, Head of Regulatory Affairs of the European Wind Energy Association (EWEA). "A legally binding renewable energy target for 2030 is crucial if we want to foster Europe's leadership in wind energy, and in particular offshore wind".

Agreement also came from Lübbeke, Senior Renewable Energy Policy Officer at the World Wildlife Fund, who argued that it would "keep Europe at the forefront of innovation, aiding economic recovery by boosting jobs and help to cut the hundreds of billions of euros Europe pays every year for important coal, oil and gas".

The Commission is to shortly produce proposals to further develop the EU's sustainability framework and the most appropriate use of bioenergy after 2020, and guidance on best practices and experience gained on support schemes to encourage greater predictability, cost-effectiveness, avoid over compensation.

Industry calls for greater support for decarbonisation

 As George Osborne vows to cut support for onshore wind, business leaders call for the opposite.

Business leaders have called upon the government to provide a more stable, consistent and sufficiently long term set of policies to enable the transition to a low carbon economy.

In a new report by think tank IPPR, Growing pains: British industry and the low-carbon transition, which is based upon conversations with senior executives in many sectors at the forefront of this transition, the leaders also call for specific industrial strategies targeted at the different sectors.

The findings suggest there are plenty of opportunities for British companies to participate in this fast growing global business sector. According to figures to be released next week by WWF, in their annual Clean Economy, Living Planet report, in 2011, the global sales value of greentech manufacturing, from manufacturing inputs like silicon to end products like biofuels, came to €198 billion ($245.3 billion), double the figure in 2008.

Reg Plant, one of the authors of the IPPR report, put an even higher value, of £2.27tn, on the global market for wider environmental goods and services, and said it was growing by 4% a year.

“The government should work far more closely with industry," say the business leaders, in order to counteract the perception that its policies are muddled, overlapping, continually being changed, and not farsighted enough, particularly for the period after 2020. All sectors considered mid-term targets (to 2030) to be important, for providing greater clarity and consistency with current investment timeframes.

Support for onshore windpower

The Government continued to give mixed signals to industry over the weekend, with the news that George Osborne was seeking to reduce the level of Renewables Obligation support for onshore wind power, after April 2013, by five or ten per cent more than that which had been proposed by the Department For Energy and Climate Change, due to pressure from backbench Tory MPs.

Tim Yeo, Conservative leader of the Select Committee for Environment and Climate Change, led the criticism of this move by saying that it made absolutely no financial sense to do this, since "you get more carbon reduction for your money by subsidising onshore wind than you do by subsidising the more expensive offshore wind power".

One British company which would be affected by such a savage and politically motivated cut in support for onshore wind, is David Brown Gear Systems, which has been manufacturing gear sets for 150 years and is based in Huddersfield and West Bromwich. The company has found the wind sector to be a core market for the business, last year receiving a £2 million grant from the regional growth fund to invest in a state-of-the-art R&D centre for wind gearbox technologies.

Carbon price floor

Amongst other Treasury policies that business leaders say should be amended or scrapped is the carbon price floor. Currently, this is specifically designed to encourage investment in nuclear power which, they say, would skew precious investment at a less effective technology. "It is ill-designed as it reduces British competitiveness, won't cut emissions and will drive up fuel bills pushing more people into fuel poverty," said Reg Plant.

Call for more partnerships

Business leaders also call in the report for “strategic public-private partnerships at the sector level based on the model successfully pioneered by the Automotive Council", which brings together leading industry players, policymakers and expert academics. This would help to identify and tackle barriers to development such as infrastructure, skills and financing requirements.

Many leaders criticise the Carbon Reduction Commitment and called again for an industry-by-industry approach to emissions reductions, with incentives such as support for research and development.

Business leaders also think that greater collaboration with European partners on low carbon innovation is advisable, to target possible technological breakthroughs. Pooling member state resources and encouraging countries and businesses to work together is cost-effective, attractive to investors and could deliver greater returns.

The UK is already doing this in the areas of carbon capture and storage (CCS) and offshore wind but the pace of change should be speeded up, they say. One way of doing this is with the help of a new European programme modelled on the governance structure of the EU's NER 300 programme, which subsidises installations of innovative renewable energy technology and CCS, and is funded by a set-aside of 300 million allowances from the European Emissions Trading Scheme.

Transport sector

Government support is also called for to help the transport sector, which is responsible for 21% of the UK's emissions, to decarbonise. In particular, despite government efforts by the offer of a grant of up to £5000 to purchase an electric vehicle, there has been little effect on the market, partly due to the high upfront cost but also to the lack of charging infrastructure.

There is also a lack of tax harmonisation on vehicles across EU member states, leading to the fact that the same car model can be effectively taxed at different rates in different countries. But addressing this issue would pose a huge political challenge, since taxation policy is largely a matter for individual states.

Several leaders called for greater integration between the energy and transport roadmaps, which would include “explicit modelling of the consequences of the electrification of transport for the electricity and gas sectors", otherwise, if the grid was not decarbonised fast enough, more electric vehicles on the roads could increase carbon emissions.

Manufacturing sector

In the manufacturing sector, the vast majority of executives interviewed for the study were ignorant of the long-term vision set out in the various EU 2050 roadmaps. This uncertainty, say the report's authors, “could reflect the increasingly short-term perspective within which many manufacturers operate".

In principle, however, when it was explained to them, participants supported the roadmaps because they provided policy direction and milestones that businesses can work towards.

A particular incentive for the manufacturing sector would be a type of 'green deal', which would help them to invest in low carbon and energy efficient technologies. A pilot scheme for small and medium-sized manufacturers should be established as a first step.

One company involved in energy is Ceres Power, a spin-off from Imperial College which manufactures fuel cell technology for use in small-scale combined heat and power systems. Despite having identified a market of 14.5 million households in the UK and aiming for a market launch in 2014, it sees its next step as being far from straightforward. It requires a significant injection of capital to finalise product development and scale up its manufacturing, which would normally come via equity finance.

But as a result of the economic downturn this has proved difficult, so it is now investigating corporate venturing, which means partnering with a large energy utility or manufacturer. Even this is difficult and, to make things easier, it is calling for the Treasury to introduce “more tax incentives for corporate investments in SMEs, together with any capital gains and dividends from these investments".

All in all, the report paints a picture of an industry full of enthusiasm, but continually frustrated by the slow pace of change and inconsistent support from government.

Low Carbon Innovation Survey

Coincidentally, in June and July, the Department of Energy and Climate Change (DECC) is surveying firms on their levels of investment in innovations that result in reductions in greenhouse gas emissions. DECC says it is also keen to investigate drivers of and barriers to investment. This will help inform the development of future innovation support programmes.

DECC says it is keen to hold brief telephone interviews with a wide range of companies active in the low carbon sector. If you would be interested in taking part in this survey, please enter your details here. If you would like further details about the survey, please contact William Lecky in the Energy Innovation team at DECC (William.Lecky@decc.gsi.gov.uk, 0300 068 5080).