Traders haven't got much of a good press recently as they have been blamed for excessive risk taking and nearly bringing down capitalism. It's a great story, but it ain't true. Retail banks - thats RBS to you and me - took excessive risks and brought down capitalism not the traders.
And so to another great story - the story of cap and trade.
The Story of Cap & Trade from Story of Stuff Project on Vimeo.
You have to hand it to Anne Leonard and her team - they know how to get press and get a great story out there. But let’s look closely at some of the accusations:
1. The cap and give away.
The free permits. I have discussed this earlier this year. Phase 1 (2005-2008) of the European Union Emissions Trading Scheme (EU-ETS) which this story is based on was a cap and giveaway. Billions were made by the utility companies in windfall profits. Which is why in phase 2 (2008-2012) and especially in phase 3 (2012-2020) the allowances will have to be bought at auction. The proposed US cap and trade scheme is also proposing auctions and the CRC Energy Efficiency Scheme - the UK's trading scheme for smaller businesses - has 100% auctions. In fact virtually every economist argues for it. It ain't a cap and giveaway anymore.
2. Caps too loose
In phase 1 for the EU-ETS, the caps were too loose which meant the carbon price fell sharply. But it’s been suggested that this was deliberate to secure buy-in from industry. Get them in, and then tighten the cap. In Phase 2 the EU rejected most national allowance plans - not the UK's - but virtually everyone else's. For phase 3, member states won't be allowed to set them - only the European Commission which means a tighter cap AND a wider cap that will include aviation and more industries. There is also a strong argument for a price floor which basically makes it a tax and cap and trade. The US proposal also suggests a price floor.
3. Offsetting
People really don't like offsetting, but lets get a few things right. There are two types - certified emission reductions (CERs) that are generated by Clean Development Mechanism (CDM) projects and voluntary emissions reductions (VERs) which are not.
CDM projects have to get verified by 12 UN bureaucrats and need to show that they are providing additionality (that a renewable project, for example, would only go ahead if there was income generated from CERs) AND that they are not just replacing home country emissions. If a utility company funded a project in China to reduce emissions of a coal plant, they would have to prove that they have reduced emissions at home first.
So, a utility company within the EU-ETS, may decide that it is more cost-effective to reduce emissions in another country (where coal fired stations are less efficient) than to reduce emissions further at home (where coal fired stations are more efficient). First, they have to get the project approved and that takes 18 months; remember, there are only 12 of these UN bureaucrats to approve 1000s of projects. Second, the EU-ETS only allows a small percentage of offsetting - around 10% - and once this has been reached there is no more allowed. Finally, they have to hope that their project in another country is built to spec and works to spec and reduces emissions. Oh, by the way, they can't use voluntary emissions to offset their own emissions as they are not regulated by the UN.
When CDM works well it can benefit countries through increased income and technology transfer. If China, India and Brazil want to grow, CDM projects can facilitate this without increasing carbon emissions.
So where does this leave us? Well, it's great story, but it's spoilt by the facts. Leonard is short on alternatives, but let’s visit them, briefly. First, we could have a carbon tax and there is a strong argument for this over cap and trade. The problem is that businesses and the public don't like them, accountants are great at reducing tax burdens and how do we harmonise a global carbon tax? There's no precedent.
What about simply telling business to meet a standard? Well, how do we define a global standard? Should it be the same for all countries? Also, command and control systems tend to reward complacency and companies that do the minimum. Companies that go beyond the minimum are simply not rewarded.
Ultimately, in my view, it's down to two things: first, the trading of carbon blows people's minds away. Think about it, it doesn't physically exist like coffee or oil or other commodities. Second, a vocal section of environmentalists don't like the profit motive or capitalism and see cap and trade as part of this problem. I don't see it as that way: it's government regulation using the profit motive. Without government, the carbon market wouldn't exist. The other benefit is that cap and trade is on the brink of securing a better climate change deal - that's some achievement.
Friday 4 December 2009
Sunday 8 November 2009
Structural issues for sustainability
The holy grail of climate change - behavourial change - is beginning to get interesting. First the government has launched a series of ads that go beyond the concept of consumers behaving rationally to choices they have. I've posted about the Act on C02 ad and I've just seen another one in today's Observer - I can't find a link for it unfortunately - and yet another TV ad on driving. These ads go beyond the rational behaviour approach and attempt to use more pyschological approaches.
In fact, DEFRA have produced a very useful overview of environmental behaviour and combined with Futerra's rules of the game in climate change communication surely we have enough to get change behaviour started?
Well, not quite. Agency versus structure - the old social science dilemma. The issue is that most people believe that climate change is an issue, but that they are not willing to change their behaviour unless there is a a percieved (there often is a benefit, but it's not always seen in the short-term) financial benefit, or if it is easy or if others do so. Do we have time to experiment whether we can convince people or should we just focus on getting businesses to change and top-down government regulation? At the moment, the government is timid in its approach prefering choice editing and nudge economics.
On the other hand, there are flourishing, if niche, alternative community collective approaches to reducing carbon. For example, transition towns, organic box schemes and car pooling to name but a few. Not all work, but some go beyond niche and become mainstream. Is Social innovation the holy grail of climate change?
The thing is time. We have 10 years to reduce carbon emissions by 34% and we're unlikely to make it: nuclear won't be back on line until 2020; wind, although growing, is not enough; the Severn Tidal barrier may be complete in 2020; wave energy is still in its infancy; there may be an increase in solar but it's not cost effective; and, yes, we'll have lots of anaerobic digestion or biomass, but it's just not enough. We have to have significant reductions in emissions and energy. It's not, in my opinion, going to come from consumers. We might get some interesting innovations from a few community projects, but it's more cost effective to change business behaviour.
What I can see, however, is some smart businesses realising that there is a lot of innovation from community groups. Would it be so crazy to imagine a large business offering to support community groups with the view that they might benefit from a new way of production or consumption? I can see developers offering land and contributions to people who want to build eco homes and go off grid. I can see supermarkets offering funding for local food networks to understand how it may work. We need radical ideas and smart businesses will know they ain't going to come from their own ranks. They will need to fund mavericks or employ them...
In fact, DEFRA have produced a very useful overview of environmental behaviour and combined with Futerra's rules of the game in climate change communication surely we have enough to get change behaviour started?
Well, not quite. Agency versus structure - the old social science dilemma. The issue is that most people believe that climate change is an issue, but that they are not willing to change their behaviour unless there is a a percieved (there often is a benefit, but it's not always seen in the short-term) financial benefit, or if it is easy or if others do so. Do we have time to experiment whether we can convince people or should we just focus on getting businesses to change and top-down government regulation? At the moment, the government is timid in its approach prefering choice editing and nudge economics.
On the other hand, there are flourishing, if niche, alternative community collective approaches to reducing carbon. For example, transition towns, organic box schemes and car pooling to name but a few. Not all work, but some go beyond niche and become mainstream. Is Social innovation the holy grail of climate change?
The thing is time. We have 10 years to reduce carbon emissions by 34% and we're unlikely to make it: nuclear won't be back on line until 2020; wind, although growing, is not enough; the Severn Tidal barrier may be complete in 2020; wave energy is still in its infancy; there may be an increase in solar but it's not cost effective; and, yes, we'll have lots of anaerobic digestion or biomass, but it's just not enough. We have to have significant reductions in emissions and energy. It's not, in my opinion, going to come from consumers. We might get some interesting innovations from a few community projects, but it's more cost effective to change business behaviour.
What I can see, however, is some smart businesses realising that there is a lot of innovation from community groups. Would it be so crazy to imagine a large business offering to support community groups with the view that they might benefit from a new way of production or consumption? I can see developers offering land and contributions to people who want to build eco homes and go off grid. I can see supermarkets offering funding for local food networks to understand how it may work. We need radical ideas and smart businesses will know they ain't going to come from their own ranks. They will need to fund mavericks or employ them...
Thursday 29 October 2009
Fairtrade and WalMart in Greenwash claims
Recently we had two very interesting lectures from guest speakers. First was Dr Mick Blowfield from the Smith School of Enterprise and the Environment at Oxford University. His main specialism is Corporate Responsibility.
He gave an excellent overview on looking at which companies do CR well and those that don't. BAT (that's British American Tobacco) are one of the leaders and they are genuinely making serious attempts at CR. I just find it hard to take CR seriously from a company that, ultimately, promotes death!
However, we were then treated to a sucker punch from Dr Blowfield who applied the same critical approaches to the Fairtrade standard. And, do you know what? If you do apply the same standards of openess and transparancy you won't find answers on the FairTrade Foundation web site, nor will you find third party verification or criticisms. A superb lecture that challenged a sacred cow, but ultimately is right in its approach: you can't have one standard of reporting for Big Business and a different one for NGOs or social enterprises.
This week we were treated to lecture from Dr Tauni Lanier, who was the first Managing Director of the Dow Jones Sustainability Index was senior project manager at the World Business Council for Sustainable Development, where her responsibility was to construct the business case for Corporate Social Responsibility reporting. Another very good lecture looking at venture philanthropy and CR.
What struck me was her opinion on WalMart's Sustainability Index - something I had blogged about a few weeks back - in which she argued that it was greenwash to avoid making any progress on their labour rights. Yet today, we had someone from the Carbon Trust who was extolling WalMart's decision.
It's about pragmatism in the end. Am I going to stop buying FairTrade coffee because it doesn't have the same transparancy as BAT? No, but my eyes are open and they need to make sure they don't get caught out on this. Is WalMart's decision greenwash or not? I want to believe that it's not and that by taking this decision it may start to encourage them to think about the benefits (ultimately to the bottom line, in the end) of better labour rights.
Naive? Maybe. What do you think?
He gave an excellent overview on looking at which companies do CR well and those that don't. BAT (that's British American Tobacco) are one of the leaders and they are genuinely making serious attempts at CR. I just find it hard to take CR seriously from a company that, ultimately, promotes death!
However, we were then treated to a sucker punch from Dr Blowfield who applied the same critical approaches to the Fairtrade standard. And, do you know what? If you do apply the same standards of openess and transparancy you won't find answers on the FairTrade Foundation web site, nor will you find third party verification or criticisms. A superb lecture that challenged a sacred cow, but ultimately is right in its approach: you can't have one standard of reporting for Big Business and a different one for NGOs or social enterprises.
This week we were treated to lecture from Dr Tauni Lanier, who was the first Managing Director of the Dow Jones Sustainability Index was senior project manager at the World Business Council for Sustainable Development, where her responsibility was to construct the business case for Corporate Social Responsibility reporting. Another very good lecture looking at venture philanthropy and CR.
What struck me was her opinion on WalMart's Sustainability Index - something I had blogged about a few weeks back - in which she argued that it was greenwash to avoid making any progress on their labour rights. Yet today, we had someone from the Carbon Trust who was extolling WalMart's decision.
It's about pragmatism in the end. Am I going to stop buying FairTrade coffee because it doesn't have the same transparancy as BAT? No, but my eyes are open and they need to make sure they don't get caught out on this. Is WalMart's decision greenwash or not? I want to believe that it's not and that by taking this decision it may start to encourage them to think about the benefits (ultimately to the bottom line, in the end) of better labour rights.
Naive? Maybe. What do you think?
Wednesday 21 October 2009
400 complaints made about Climate Change Ad
It didn't take long, but I did wonder if anyone would complain. See Richard's news...
Sunday 18 October 2009
Is there a happy ending?
I have mixed feelings about this advert by Act on CO2 - the government's consumer campaign on climate change. I am haunted by my children's future questions of: "daddy, what did you do to stop climate change?" Indeed, what am I doing?
But, on the other hand, I also know that the majority of the population will turn away. Adverts are tricky to get right for one segment. To get right for all segments with one message is virtually impossible. Besides, TV ads are a risk now aren't they? Who watches TV? There needs to be an understanding that it's the middle classes that have to be targeted (they generate most of the emissions) and they tend to watch TV the least. The message needs to be less overt and more covert. How? Don't sell stuff (stop climate change) sell a lifestyle. Sell Southwold and fish (pollock, remember!) and chips rather than Australia. Sell working from home once a week rather than a commute for five days. Sell a banter in a shared car journey rather than a depressed M6 traffic jam solo journey. Better still, sell fitness for free by cycling rather than a drive...
But, on the other hand, I also know that the majority of the population will turn away. Adverts are tricky to get right for one segment. To get right for all segments with one message is virtually impossible. Besides, TV ads are a risk now aren't they? Who watches TV? There needs to be an understanding that it's the middle classes that have to be targeted (they generate most of the emissions) and they tend to watch TV the least. The message needs to be less overt and more covert. How? Don't sell stuff (stop climate change) sell a lifestyle. Sell Southwold and fish (pollock, remember!) and chips rather than Australia. Sell working from home once a week rather than a commute for five days. Sell a banter in a shared car journey rather than a depressed M6 traffic jam solo journey. Better still, sell fitness for free by cycling rather than a drive...
Book Review on Powerdown by Richard Heinberg
I am doing a book review on Powerdown by Richard Heinberg. Now, before I chose this book, I didn't know that it was one of the bibles of the Transition Town Movement. Essentially, Powerdown makes the case for peak oil and suggests we have four alternatives for the energy descent that looms. These are: energy resource wars, technological fixes, powerdown - we cut energy use - and lifeboats where we create refuges where we can. Peak oil is a given. There may be debates on whether you include tar sands and the like, but economic if not physical peak oil is accepted even by the oil industry.
Resource wars are not a great idea, obviously, but there is a new "carve up" of resources (by this I include food and water as well as oil and minerals) already going on. What's interesting is the rejection of the technological fix and the focus on powerdown or creating refuges. Essentially, Heinberg argues that it's too late for technological fixes. So we have to powerdown, or at least some of us will do this with others following after the oil has run out. Powerdown is reducing dependency on oil by producing and consuming local food and energy sources, for example, to create resilient communities. It is the ultimate no growth strategy.
Transition Towns looks to be a genuine social movement that is rapidly growing. It's democratic, open and consenual with groups in the country and in the city. Although not mentioned in any of their literature it's very much following Gramsci's 'praxis' - doing stuff rather than just a campaign group.
I have a few questions: first - how large and diverse is this movement in terms of numbers? Is it predominantly a liberal white middle class movement? At what point does this become a national powerdown (where you have convinced the majority of the population) rather than lifeboats? And, will this more likely and happen more quickly than the technological approach?
Second, where does business fit in this. If energy descent IS the only option, then Tescos and, perhaps, many more need to change their business model fast - very fast. Perhaps there is no room for Tesco! Is there room for Waitrose and the Co-op perhaps?
Third, what happens to tax revenues - presumably they decline in line with the descent and therefore education, health and so on decline too. I am assuming that defence cuts are one-off savings. Where does government fit into this?
Fourth, why is it energy descent as there is an abundance of energy out there: solar, wind, biochar, waste and, dare I say it, nuclear?
Anyone have any answers or comments?
Resource wars are not a great idea, obviously, but there is a new "carve up" of resources (by this I include food and water as well as oil and minerals) already going on. What's interesting is the rejection of the technological fix and the focus on powerdown or creating refuges. Essentially, Heinberg argues that it's too late for technological fixes. So we have to powerdown, or at least some of us will do this with others following after the oil has run out. Powerdown is reducing dependency on oil by producing and consuming local food and energy sources, for example, to create resilient communities. It is the ultimate no growth strategy.
Transition Towns looks to be a genuine social movement that is rapidly growing. It's democratic, open and consenual with groups in the country and in the city. Although not mentioned in any of their literature it's very much following Gramsci's 'praxis' - doing stuff rather than just a campaign group.
I have a few questions: first - how large and diverse is this movement in terms of numbers? Is it predominantly a liberal white middle class movement? At what point does this become a national powerdown (where you have convinced the majority of the population) rather than lifeboats? And, will this more likely and happen more quickly than the technological approach?
Second, where does business fit in this. If energy descent IS the only option, then Tescos and, perhaps, many more need to change their business model fast - very fast. Perhaps there is no room for Tesco! Is there room for Waitrose and the Co-op perhaps?
Third, what happens to tax revenues - presumably they decline in line with the descent and therefore education, health and so on decline too. I am assuming that defence cuts are one-off savings. Where does government fit into this?
Fourth, why is it energy descent as there is an abundance of energy out there: solar, wind, biochar, waste and, dare I say it, nuclear?
Anyone have any answers or comments?
Thursday 15 October 2009
The End of the Line
Last night I went to a viewing of The End of the Line sponsored by Adnams. It's a disturbing film made by the same director of Black Gold that highlights the problem of over fishing. Using figures from the Charles Glover's book, the film has a dramatic conclusion: all the fish we consume on a regular basis will disappear by 2050.
The science is there and pretty robust - there's a debate about exactly when the fish will run out, but everyone agrees that fish stocks are declining at a rapid rate. The solution is obvious, we need to consume fish more sustainably. This is one of the questions in this week's lesson in Sustainability. How DO we get people to consume more sustainably?
The film promoted the idea of sustainable consumerism. If we buy fish from sustainable sources, then businesses will match demand. At the same time businesses may stop selling fish from depleted stocks. Since the film, Marks and Spencers, Pret a Manger and Waitrose have all agreed to stop selling fish that are endangered. How can we help? We buy fish that is certified by the Marine Stewardship Council. Like Fair Trade, it has sustainability standards, a logo and is growing fast. But we need to be more proactive and demand sustainable fish at our restaurants, shops and even our chippies.
It's hard, isn't it, to change habits? Is Mary Janes at Cromer really going to offer sustainable fish and chips? Should I tell my kids that we won't be having cod anymore and their monthly treat is over? Sustainable fish is also more expensive. It's a hard sell.
There is also a strong argument that advertising and awareness doesn't work for sustainability campaigns: for every successful fair trade logo there are others that fail. Anyone using the carbon footprint logo, for example? We don't buy stuff according to neo-classical rationality. Behavourial economics suggests we buy depending on what others do - we are tribal.
So what do we do? For me, awareness, eco-labelling and campaigns are not enough - our consultancy project with Adnams was clear: people responded tribally, not because of climate change. We need to change businesses. Sometimes businesses change because people at the top want change. Cadburys is moving to fair trade chocolate not because of pressure from consumers, but because the board thought it was the right thing to do. But because not all businesses change we also need strong government legislation. Change the structures and attitudes will follow. However, structural changes that, for example, ban types of fish, require pressure from people lobbying politicians. Social movements get more access, and, ultimately, more success if they can show evidence of sustainable consumption.
We need consumers to lead change to get government to introduce policies to make businesses who haven't changed, change. In the meantime, ask for pollock at your chippy.
The science is there and pretty robust - there's a debate about exactly when the fish will run out, but everyone agrees that fish stocks are declining at a rapid rate. The solution is obvious, we need to consume fish more sustainably. This is one of the questions in this week's lesson in Sustainability. How DO we get people to consume more sustainably?
The film promoted the idea of sustainable consumerism. If we buy fish from sustainable sources, then businesses will match demand. At the same time businesses may stop selling fish from depleted stocks. Since the film, Marks and Spencers, Pret a Manger and Waitrose have all agreed to stop selling fish that are endangered. How can we help? We buy fish that is certified by the Marine Stewardship Council. Like Fair Trade, it has sustainability standards, a logo and is growing fast. But we need to be more proactive and demand sustainable fish at our restaurants, shops and even our chippies.
It's hard, isn't it, to change habits? Is Mary Janes at Cromer really going to offer sustainable fish and chips? Should I tell my kids that we won't be having cod anymore and their monthly treat is over? Sustainable fish is also more expensive. It's a hard sell.
There is also a strong argument that advertising and awareness doesn't work for sustainability campaigns: for every successful fair trade logo there are others that fail. Anyone using the carbon footprint logo, for example? We don't buy stuff according to neo-classical rationality. Behavourial economics suggests we buy depending on what others do - we are tribal.
So what do we do? For me, awareness, eco-labelling and campaigns are not enough - our consultancy project with Adnams was clear: people responded tribally, not because of climate change. We need to change businesses. Sometimes businesses change because people at the top want change. Cadburys is moving to fair trade chocolate not because of pressure from consumers, but because the board thought it was the right thing to do. But because not all businesses change we also need strong government legislation. Change the structures and attitudes will follow. However, structural changes that, for example, ban types of fish, require pressure from people lobbying politicians. Social movements get more access, and, ultimately, more success if they can show evidence of sustainable consumption.
We need consumers to lead change to get government to introduce policies to make businesses who haven't changed, change. In the meantime, ask for pollock at your chippy.
Sunday 11 October 2009
Prosperity without growth?
Professor Tim Jackson of the Sustainable Development Commission has made the case that we have been living the myth of economic growth. This myth has led to widening income inequality, stagnated our wellbeing and is leading us to environmental catastrophe. He suggests that we need to recalibrate - perhaps revolutionise is a better word for it - the economy to restrict economic growth to ensure a more even distribution of wealth and to avert climate change: Prosperity without growth.
How? Jackson groups his 12 solutions into three key areas: building a sustainable macroeconomy; protecting capabilities for flourishing and respecting ecological limits.
Building a sustainable macroeconomy
First, we need to reconfigure how we measure growth. Not as radical as it sounds. The Stern Report was essentially a new way of looking at long term growth taking into account externalities. Jackson argues that we need to consider caps or rationing and to embed them into our economic modelling. Second, he argues for a Green New Deal. Third, financial capital needs to be reined in using a tobin tax or tighter regulations. Fourth, a new model of economic accounting is required to take into account economic wellbeing. President Sarkozy of France has argued for this following Joseph Stiglitz and Amarta Sen as well as other eminent economists.
Protecting capabilities for flourishing
Fifth, we need to move towards a much better work life balance - perhaps following France's 35 hour maximum working week. I'm not quite sure how that fits in with Sarkozy's current thinking as he got rid of this on an election platform! Sixth, Jackson argues for a redistribution of wealth on a large scale. His seventh suggestion is a reiteration of measuring wellbeing - he quite likes this one. The eighth suggestion is interesting as it argues for strengthening human and social capital creating resilient communities. This could involve increased participation to protecting our libraries to making sure we fund our museums. Nine is to restrict and reverse consumerist culture. This could mean more funding to the BBC and restrictions on advertising especially for children.
Respecting ecological limits
The tenth suggestion is a cap on on emissions or resources. Nothing too radical here, the EU-ETS and CRC are essentially emissions caps and more are being planned. Perhaps he refering to emissions caps for individuals that Milliband suggested a few years back. Jackson doesn't sell this one very well by referring to war-time rationing or cuban-style living! Suggestion 11 argues for the greening of the taxation system - something that is slowly happening. There is no mention of what happens to tax revenues when people stop using carbon or resources. Finally, suggestion 12 argues for technological transfer and for the protection of biodiversity.
Remember this is a government commission which highlights how mainstream these ideas are becoming and businesses need to be aware that some of these ideas may be policy in the next few years. What I think is interesting is the language or "discourse" of the argument. It doesn't engage business, if anything business causes the problem. The market is a problem and government is the solution. There are three key issues, though.
First, governments have to be elected. David Cameron gets all touchy feely about wellbeing indicators and at the same time suggests that his government will slash spending on, well, museums, the BBC and other things that arguably enhance our wellbeing. Governments, however, do want to make radical changes - they know the seriousness of climate change, but try to tax more on cars or petrol and you have a revolt. They back down. They back down as the public don't want to be told by the "nanny state" what to do.
The second point is that businesses and markets can work more quickly within a boundary dictated by the government. The EU-ETS and the CRC are examples of this. The government basically got businesses on board by saying: "we're going to cap your emissions, but you can do what you like to reduce them or to buy carbon credits". Very little fuss. Personal Carbon Credits could do just that. Let the market dictate within a boundary dictated by the government. Who has a smaller carbon footprint? The less well off. Who has the largest footprint. The middle classes. Let them trade - it sounds nicer than redistribution of wealth. People who consume less are now rewarded. Of course, it's not as simple as that - there are a whole host of questions on how to decide the cap and whether it should be household based or individual based and so on.
The final point goes back to a theme I keep refering to. Get business on board with these ideas and you will have much greater change. It's easier to change 10 multi-nationals corporations than to change the citizens of ten countries.
How? Jackson groups his 12 solutions into three key areas: building a sustainable macroeconomy; protecting capabilities for flourishing and respecting ecological limits.
Building a sustainable macroeconomy
First, we need to reconfigure how we measure growth. Not as radical as it sounds. The Stern Report was essentially a new way of looking at long term growth taking into account externalities. Jackson argues that we need to consider caps or rationing and to embed them into our economic modelling. Second, he argues for a Green New Deal. Third, financial capital needs to be reined in using a tobin tax or tighter regulations. Fourth, a new model of economic accounting is required to take into account economic wellbeing. President Sarkozy of France has argued for this following Joseph Stiglitz and Amarta Sen as well as other eminent economists.
Protecting capabilities for flourishing
Fifth, we need to move towards a much better work life balance - perhaps following France's 35 hour maximum working week. I'm not quite sure how that fits in with Sarkozy's current thinking as he got rid of this on an election platform! Sixth, Jackson argues for a redistribution of wealth on a large scale. His seventh suggestion is a reiteration of measuring wellbeing - he quite likes this one. The eighth suggestion is interesting as it argues for strengthening human and social capital creating resilient communities. This could involve increased participation to protecting our libraries to making sure we fund our museums. Nine is to restrict and reverse consumerist culture. This could mean more funding to the BBC and restrictions on advertising especially for children.
Respecting ecological limits
The tenth suggestion is a cap on on emissions or resources. Nothing too radical here, the EU-ETS and CRC are essentially emissions caps and more are being planned. Perhaps he refering to emissions caps for individuals that Milliband suggested a few years back. Jackson doesn't sell this one very well by referring to war-time rationing or cuban-style living! Suggestion 11 argues for the greening of the taxation system - something that is slowly happening. There is no mention of what happens to tax revenues when people stop using carbon or resources. Finally, suggestion 12 argues for technological transfer and for the protection of biodiversity.
Remember this is a government commission which highlights how mainstream these ideas are becoming and businesses need to be aware that some of these ideas may be policy in the next few years. What I think is interesting is the language or "discourse" of the argument. It doesn't engage business, if anything business causes the problem. The market is a problem and government is the solution. There are three key issues, though.
First, governments have to be elected. David Cameron gets all touchy feely about wellbeing indicators and at the same time suggests that his government will slash spending on, well, museums, the BBC and other things that arguably enhance our wellbeing. Governments, however, do want to make radical changes - they know the seriousness of climate change, but try to tax more on cars or petrol and you have a revolt. They back down. They back down as the public don't want to be told by the "nanny state" what to do.
The second point is that businesses and markets can work more quickly within a boundary dictated by the government. The EU-ETS and the CRC are examples of this. The government basically got businesses on board by saying: "we're going to cap your emissions, but you can do what you like to reduce them or to buy carbon credits". Very little fuss. Personal Carbon Credits could do just that. Let the market dictate within a boundary dictated by the government. Who has a smaller carbon footprint? The less well off. Who has the largest footprint. The middle classes. Let them trade - it sounds nicer than redistribution of wealth. People who consume less are now rewarded. Of course, it's not as simple as that - there are a whole host of questions on how to decide the cap and whether it should be household based or individual based and so on.
The final point goes back to a theme I keep refering to. Get business on board with these ideas and you will have much greater change. It's easier to change 10 multi-nationals corporations than to change the citizens of ten countries.
Tuesday 6 October 2009
Green Metrics
Following on from recent posts about greenwash and whether big businesses are doing enough, the Harvard Business Review has posted a blog about green metrics. They ask the question:
Who's greener: a computer manufacturer with revenues of $61 billion planting a tree for every computer sold, or the world's largest retailer with revenues of $380 billion demanding environmental transparency and performance improvements from all of its suppliers?
The authors - Nicholas Eisenberger and Mateo Bueno - think it's clear: it's the second one which, in fact, is WalMart. The first company - Dell - is making emissions offsets yet it pales into insignificance to the impact WalMart will have. Yet, Newsweek argued Dell was ahead of WalMart. Why? According to the authors it was because Newsweek were using a flawed metric on measuring on who was doing less bad.
Who's greener: a computer manufacturer with revenues of $61 billion planting a tree for every computer sold, or the world's largest retailer with revenues of $380 billion demanding environmental transparency and performance improvements from all of its suppliers?
The authors - Nicholas Eisenberger and Mateo Bueno - think it's clear: it's the second one which, in fact, is WalMart. The first company - Dell - is making emissions offsets yet it pales into insignificance to the impact WalMart will have. Yet, Newsweek argued Dell was ahead of WalMart. Why? According to the authors it was because Newsweek were using a flawed metric on measuring on who was doing less bad.
Sunday 4 October 2009
How to spot Greenwash
I got a very nice email from Kim Hallwood at Futerra who forwarded the Greenwash guide. It's great reading, and if you're really busy they have a quick read section! There's also a Greenwash USA guide too.
It's a superb overview on how to spot Greenwash and the signs to look for. Thanks Futerra.
It's a superb overview on how to spot Greenwash and the signs to look for. Thanks Futerra.
Friday 2 October 2009
Corporate Responsibility OR Greenwash?
In the Carbon MBA we share one or two modules with other masters courses and Sustainable Consumption is one of them. It's a great module as business approaches engage with more community and grassroots approaches. The majority on the course from other masters appear, at first glance, anti-big business. Perhaps they see me as anti-grassroots!
This week, businesses, particularly multi-national companies, were under scrutiny for not caring about the environment, labour rights and ethics. We were treated to the story of stuff which reaffirms all the stereotypical negative stuff about businesses. You know the sort of thing: they slash and burn forests, make workers work too hard and pollute the environment.
It's good to be challenged, but we mustn't get lazy and just be anti-business. What struck me in the class debate was the poverty of clarity in criticisms of business practices, yet at the same time people demanded that there should be high levels of transparency from MNCs. MNCs should be transparent, but lets argue on what we know not what we think we know. For example, some argued that marketing and advertising were evils that created unsustainable consumption. If it's that easy then a few marketing campaigns will change the behaviour of individuals and reduce emissions - bingo - we have solved climate change. Hmmm...It's not as simple as that is it?
Wal-Mart - the largest supermarket in the world with over $400billion in revenues - has launched a supply chain sustainability index. It's not perfect and there are critics, but it's an enormous job and pushes those in the supply chain to do the same. VW-Audi are pursuing their PowerTrain Strategy to make all their models electric or bio-fuel. What's interesting is that Wal-Mart's customer base are not the organic/muesli/liberal type, more the Joe the plumber. Equally, not all car manufacturers are adopting VW-Audis strategy. With both companies, there's an element of saving money, gaining a competitive advantage and more profit or simply doing the right thing.
So, some businesses are ahead of the customer and government. Some need to do more - a lot more. But all businesses whether they are limiteds, plc's, co-ops or public sector have to run so that they pay their way and balance the books or make a surplus. It's not profit that is differentiating which businesses follow sustainable practices. It's the people running them. If we can influence them, then changing a billion dollar industry is going to have a big impact.
This week, businesses, particularly multi-national companies, were under scrutiny for not caring about the environment, labour rights and ethics. We were treated to the story of stuff which reaffirms all the stereotypical negative stuff about businesses. You know the sort of thing: they slash and burn forests, make workers work too hard and pollute the environment.
It's good to be challenged, but we mustn't get lazy and just be anti-business. What struck me in the class debate was the poverty of clarity in criticisms of business practices, yet at the same time people demanded that there should be high levels of transparency from MNCs. MNCs should be transparent, but lets argue on what we know not what we think we know. For example, some argued that marketing and advertising were evils that created unsustainable consumption. If it's that easy then a few marketing campaigns will change the behaviour of individuals and reduce emissions - bingo - we have solved climate change. Hmmm...It's not as simple as that is it?
Wal-Mart - the largest supermarket in the world with over $400billion in revenues - has launched a supply chain sustainability index. It's not perfect and there are critics, but it's an enormous job and pushes those in the supply chain to do the same. VW-Audi are pursuing their PowerTrain Strategy to make all their models electric or bio-fuel. What's interesting is that Wal-Mart's customer base are not the organic/muesli/liberal type, more the Joe the plumber. Equally, not all car manufacturers are adopting VW-Audis strategy. With both companies, there's an element of saving money, gaining a competitive advantage and more profit or simply doing the right thing.
So, some businesses are ahead of the customer and government. Some need to do more - a lot more. But all businesses whether they are limiteds, plc's, co-ops or public sector have to run so that they pay their way and balance the books or make a surplus. It's not profit that is differentiating which businesses follow sustainable practices. It's the people running them. If we can influence them, then changing a billion dollar industry is going to have a big impact.
Friday 25 September 2009
Blogs as a learning tool
One of our latest modules: Theories of Sustainable Consumption has, as part of our homework, a request from tutors that we all use blogs to write down our thoughts. It's a great idea for sharing ideas and resources.
I'm really looking forward to this course as it looks at some of more radical green ideas that people are doing now. In marketing and innovation we talk of diffusion of technology, here we're talking about the diffusion of ideas - I think the term is social diffusion of ideas. I remember recycling 10 years a ago and people thought I was a bit mad - well we've come a long way.
Perhaps the Transition Towns movement will eventually diffuse into society - who knows, but if we can find out what works early on then it becomes easier to reduce emissions. So, I'm looking forward to sharing all those crazy ideas and trying to be as open minded as possible.
Here's a quick reminder why we need to figure all of this out....
I'm really looking forward to this course as it looks at some of more radical green ideas that people are doing now. In marketing and innovation we talk of diffusion of technology, here we're talking about the diffusion of ideas - I think the term is social diffusion of ideas. I remember recycling 10 years a ago and people thought I was a bit mad - well we've come a long way.
Perhaps the Transition Towns movement will eventually diffuse into society - who knows, but if we can find out what works early on then it becomes easier to reduce emissions. So, I'm looking forward to sharing all those crazy ideas and trying to be as open minded as possible.
Here's a quick reminder why we need to figure all of this out....
Tuesday 22 September 2009
Climate Talks Jargon buster
With many thanks to The Guardian's Damian Carrington
Copenhagen: The venue in December for the final UN negotiations to deliver a successor to the Kyoto treaty. There are preparatory meetings in Bangkok and Barcelona before then.
Carbon intensity: How much fossil fuel you have to burn to make something or deliver a service. Reducing carbon intensity does not mean cutting overall emissions, but it does mean that a country can expand its economy without driving up emissions at the same rate.
Implicit targets: A diplomatic phrase deployed by India to describe targets India has chosen for itself and for which it will not be held to account by anyone else. Appearing to cave in to foreign demands for specific cuts would be political poison in Dehli.
Mitigation: This simply means actions to reduce global warming, most importantly cuts in greenhouse gas emissions.
Afforestation: The replanting of trees. About 20% of all global carbon dioxide emissions come from the destruction of forests. Preventing that is the main focus of the UN talks but China is also keen on creating new forests.
Cap and trade: One way of setting a limit on greenhouse gas emissions for a region or industry. Polluters are given carbon permits that add up to the cap. They can then sell permits if the have cut their emissions to those who have not. In theory, it allows a market to deliver cuts efficiently.
Carbon tax: A direct tax on activities that result in carbon emissions. Much less bureaucratic than cap-and-trade but cannot deliver an exact cut in overall emissions.
Offsetting: Paying for reductions in emissions elsewhere to compensate for polluting activities. Popular on a voluntary basis for flights, but criticised on a national level for allowing rich nations to butt their way out of making cuts at home.
Peak emissions: The time at which global greenhouse gas emissions stop growing and begin to fall. Scientists say that year must be 2015 if dangerous climate change is to be averted but current trends will not achieve this.
Intergovernmental Panel on Climate Change (IPCC): The international scientific body, involving thousands of scientists, used by the UN since 1988 to provide a neutral source of information on climate change. Its reports are approved by national governments. It was awarded the Nobel peace prize along with Al Gore.
Wednesday 9 September 2009
Carbon Combat!
As part of our consultancy project with Adnams I mentioned that we were on a quest to find the holy grail of carbon reductions. We ran a project with two Hotels in the Adnams group: the Swan and the Crown. Both are old buildings restricted by planning regulations and by-laws in Southwold, but the staff are keen and aware of environmental issues.
Our project, named Carbon Combat at the suggestion of the hotel teams, involved a competitive element and a financial incentive. For a four week period each hotel team battled to see who could save the most carbon emissions. Each week, after meter readings, posters were displayed in staff rooms and in other areas where staff would notice them. We used a baseline of the last three years' meter readings and the staff were told that all financial savings would be passed on to the hotel team that saves the most emissions.
The project ran at short notice and at the busiest time of the year for both hotels. Guidance was given on "quick wins" or low hanging fruit: switching off lights; keeping fridge doors closed; changing lightbulbs to low energy bulbs; switching off the gas when not needed in the kitchen. All staff - from cleaners, chefs, bar staff and waitresses - were encouraged to think about how to reduce emissions and guests were discreetly guided with quirky messages in their bedrooms.
The results are very interesting. The Swan won with a 32% reduction for the four weeks year on year. The Crown still managed a respectable 9% reduction. The Swan did have an advantage in that they had more efficient boilers and a newer kitchen. The Crown serves more covers using a more inefficient kitchen. However, emissions per room were higher for the Crown than for the Swan.
What's pretty clear, we think, is that around 9%-10% of the reduction in emissions was due to behavioural change - the switching off of lightbulbs and so on. Even the sceptics in the hotel still wanted to beat the other team and there was much discussion on the best method and how the figures were calculated. We're clear that "green teams" are not enough: there needs to be financial incentives -we recommend up to 50% of the savings to be passed on to the staff- with a competitive element attached to it.
What's pleasing is that the management team were very happy - they saved £1000 in the four weeks - and they're looking to extend the project all year round to all four hotels. We will also be recommending to Adnams that they extend the project to their retail outlets and offices. A 10% reduction is easily within reach and given that Adnams have signed to the Guardians 10:10 campaign - it's all come together nicely.
Our project, named Carbon Combat at the suggestion of the hotel teams, involved a competitive element and a financial incentive. For a four week period each hotel team battled to see who could save the most carbon emissions. Each week, after meter readings, posters were displayed in staff rooms and in other areas where staff would notice them. We used a baseline of the last three years' meter readings and the staff were told that all financial savings would be passed on to the hotel team that saves the most emissions.
The project ran at short notice and at the busiest time of the year for both hotels. Guidance was given on "quick wins" or low hanging fruit: switching off lights; keeping fridge doors closed; changing lightbulbs to low energy bulbs; switching off the gas when not needed in the kitchen. All staff - from cleaners, chefs, bar staff and waitresses - were encouraged to think about how to reduce emissions and guests were discreetly guided with quirky messages in their bedrooms.
The results are very interesting. The Swan won with a 32% reduction for the four weeks year on year. The Crown still managed a respectable 9% reduction. The Swan did have an advantage in that they had more efficient boilers and a newer kitchen. The Crown serves more covers using a more inefficient kitchen. However, emissions per room were higher for the Crown than for the Swan.
What's pretty clear, we think, is that around 9%-10% of the reduction in emissions was due to behavioural change - the switching off of lightbulbs and so on. Even the sceptics in the hotel still wanted to beat the other team and there was much discussion on the best method and how the figures were calculated. We're clear that "green teams" are not enough: there needs to be financial incentives -we recommend up to 50% of the savings to be passed on to the staff- with a competitive element attached to it.
What's pleasing is that the management team were very happy - they saved £1000 in the four weeks - and they're looking to extend the project all year round to all four hotels. We will also be recommending to Adnams that they extend the project to their retail outlets and offices. A 10% reduction is easily within reach and given that Adnams have signed to the Guardians 10:10 campaign - it's all come together nicely.
Tuesday 21 July 2009
The End of Charity part 2
Nic Frances did what he said he would do: become an actor. He is now an actor that can have lots of rests in between jobs as his company Cool NRG has succeeded in gaining approval from the UN for its programmatic CDM project that starts in Mexico. You read can more about it here and here.
Friday 3 July 2009
The End of Charity
Every now and then someone comes along and inspires you. On the Carbon MBA course, we're lucky to have master classes from people of all walks of life. We've had Carbon specialists talking about Kyoto to finance directors discussing their company. All have been excellent, but none as inspirational as Nic Frances. Frances is one of those people who have the ability to inspire all sorts of people in different ways. He has been a priest and then became a charity worker before losing faith in "doing good". He now calls himself a social entrepreneur, but has decided to sell his businesses and become an actor. Hardly bog-standard MBA stuff.
His book The End of Charity highlights his journey from Jesus to selling to carbon credits in Mexico. It's well worth a read and I would jettison any MBA text book that has the word(s)excellence or value-added or blue skies or whatever the latest business jargon is in fashion.
He had a failing business that he turned around by getting to grips with the Carbon market, and, indeed, made a very good carbon margin. In Victoria in Australia, he realised that he could gain carbon credits by giving away low energy light bulbs. The price of carbon was A$10 a tonne, each pack of four light bulbs saved one tonne of carbon per annum and cost A$5 to distribute. The carbon margin being A$5/tonne. His failing business was saved. He did the same in the UK. In September last year he distributed over 4 million light bulbs via the Sun newspaper. They gained carbon credits for the energy companies and he took a cut. According to external audits 85% of the bulbs are used. This means a huge reduction in emissions.
So what? Well, no charity could match that nor could any government; in fact no organisation of any kind has matched what he has done to reduce emissions. And, it gets better:
Frances hopes in the next few weeks to have approval from the UN for his Clean Development Mechanism (CDM) project in Mexico.
CDM projects, put simply, are carbon offsets. An energy company in the UK may miss its EU-ETS targets and can buy emissions reductions elsewhere - in this case Mexico. There are skeptics about offsets, but they are highly regulated and will reduce global emissions AND reduce poverty. Frances' company - Cool NRG -is giving away 30 million low energy light bulbs to low and middle income households across Mexico starting in the city of Puebla. It is estimated it will cut 8.1 million tonnes of CO2 over ten years. It will also save US$165 million in lower energy bills AND save the Mexican government US $585 million in electricity generation infrastructure costs and US $200 million in reduced household electricity subsidy payments each year. Cool NRG make an IRR of 15% if the price of carbon is around €15/tonne. A lot more money is made if projections of the price of carbon rising to €30-€50/tonne in the next 5-10 years are correct.
Some interesting facts emerge from this: the saving to the Mexican people is the equivalent of one weeks income and the money saved is five times the annual US aid budget to Mexico. This is money direct to the people without NGOs or governments saying what it can be spent on.
It's a work of genius from an entrepreneur who wants to make money. Can Oxfam do this - yes they can, but they don't. Can any NGO do this - yes they can, but they don't. What some people don't like is that it makes a carbon margin; what they fail to understand is that "doing good" doesn't work. It needs to be both.
His book The End of Charity highlights his journey from Jesus to selling to carbon credits in Mexico. It's well worth a read and I would jettison any MBA text book that has the word(s)excellence or value-added or blue skies or whatever the latest business jargon is in fashion.
He had a failing business that he turned around by getting to grips with the Carbon market, and, indeed, made a very good carbon margin. In Victoria in Australia, he realised that he could gain carbon credits by giving away low energy light bulbs. The price of carbon was A$10 a tonne, each pack of four light bulbs saved one tonne of carbon per annum and cost A$5 to distribute. The carbon margin being A$5/tonne. His failing business was saved. He did the same in the UK. In September last year he distributed over 4 million light bulbs via the Sun newspaper. They gained carbon credits for the energy companies and he took a cut. According to external audits 85% of the bulbs are used. This means a huge reduction in emissions.
So what? Well, no charity could match that nor could any government; in fact no organisation of any kind has matched what he has done to reduce emissions. And, it gets better:
Frances hopes in the next few weeks to have approval from the UN for his Clean Development Mechanism (CDM) project in Mexico.
CDM projects, put simply, are carbon offsets. An energy company in the UK may miss its EU-ETS targets and can buy emissions reductions elsewhere - in this case Mexico. There are skeptics about offsets, but they are highly regulated and will reduce global emissions AND reduce poverty. Frances' company - Cool NRG -is giving away 30 million low energy light bulbs to low and middle income households across Mexico starting in the city of Puebla. It is estimated it will cut 8.1 million tonnes of CO2 over ten years. It will also save US$165 million in lower energy bills AND save the Mexican government US $585 million in electricity generation infrastructure costs and US $200 million in reduced household electricity subsidy payments each year. Cool NRG make an IRR of 15% if the price of carbon is around €15/tonne. A lot more money is made if projections of the price of carbon rising to €30-€50/tonne in the next 5-10 years are correct.
Some interesting facts emerge from this: the saving to the Mexican people is the equivalent of one weeks income and the money saved is five times the annual US aid budget to Mexico. This is money direct to the people without NGOs or governments saying what it can be spent on.
It's a work of genius from an entrepreneur who wants to make money. Can Oxfam do this - yes they can, but they don't. Can any NGO do this - yes they can, but they don't. What some people don't like is that it makes a carbon margin; what they fail to understand is that "doing good" doesn't work. It needs to be both.
Friday 26 June 2009
Waxman-Markey Bill
US law makers always have great sounding names for their bills and acts as they are normally named after the legislators themselves rather than some drab sounding government diktat.
One bill that is going to potentially change the world is the Waxman-Markey bill. The bill attempts to replicate the EU-ETS in the US creating a federal cap and trade scheme. It passed the first hurdle getting through the House of Reps after some last minute compromises to appease the farm and coal lobbies. In the end, Republicans saved the bill from Democrats who represented the rust belt and the coal lobby. It now has to go through the Senate in September where a tough fight is expected.
So what does it entail? The Grist has a great summary of the 1000 page bill. First, the bill is asking for cuts of 17 % from 2005 levels by 2020 and an 80 % reduction by 2050. Sounds impressive, but it's only 3.6% below 1990 levels by 2020 compared to the EU where the reduction is 20%. However, the scope is far wider in the US system. It includes transport fuel, aviation and covers 80% of emissions compared to 46% in the EU.
Included in the bill is a standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity and new funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies
Unlike the Phase 2 EU-ETS, where 90% of carbon allowances were granted free to industry, the US system is auctioning 60% of theirs. Those allowances that are free will be granted to the usual industry sectors such as gas and coal, but also to adaptation which might mean renewable energy companies. There is also a price floor of $10/tonneCO2 which many have argued for the EU-ETS.
One bill that is going to potentially change the world is the Waxman-Markey bill. The bill attempts to replicate the EU-ETS in the US creating a federal cap and trade scheme. It passed the first hurdle getting through the House of Reps after some last minute compromises to appease the farm and coal lobbies. In the end, Republicans saved the bill from Democrats who represented the rust belt and the coal lobby. It now has to go through the Senate in September where a tough fight is expected.
So what does it entail? The Grist has a great summary of the 1000 page bill. First, the bill is asking for cuts of 17 % from 2005 levels by 2020 and an 80 % reduction by 2050. Sounds impressive, but it's only 3.6% below 1990 levels by 2020 compared to the EU where the reduction is 20%. However, the scope is far wider in the US system. It includes transport fuel, aviation and covers 80% of emissions compared to 46% in the EU.
Included in the bill is a standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity and new funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies
Unlike the Phase 2 EU-ETS, where 90% of carbon allowances were granted free to industry, the US system is auctioning 60% of theirs. Those allowances that are free will be granted to the usual industry sectors such as gas and coal, but also to adaptation which might mean renewable energy companies. There is also a price floor of $10/tonneCO2 which many have argued for the EU-ETS.
Offsets will be allowed but capped and 50% must be in the US with farming and forestry to play a large part. The EU has the CDM and JI Kyoto Protocol initiatives which may change after Copenhagen in December.
The bill is a radical departure from the Bush years and is receiving fierce criticism from everyone: farmers, the oil business, greens and the coal lobby. It won't please everyone, but if it gets passed we have a real chance to make progress on climate change. Americans, the world needs you to make the right choice!
Sunday 21 June 2009
The Holy Grail
I'm part of a team of three Carbon MBA students working on a consultancy project for Adnams. A very green company; their brewery is extremely efficient in keeping emissions low and their distribution centre is even greener. It's well worth a tour if you're down that part of the world.
The team is doing a fairly straightforward carbon footprint project, but the difficult bit is trying to attempt to link the carbon data to behavioural change. In Adnams' hotels up to 20% of emissions, and, possibly more, could be reduced by staff using less electricity or heat. The key question is: what would persuade staff to use less energy? The answer is the climate change equivalent of the Holy Grail.
What motivates you to actively reduce emissions? Some of you are aware of what needs to be done and act accordingly, but is an awareness campaign enough for those who are less bothered? And, what kind of awareness campaign: a softly softly approach or one that frightens them? It's not like cigarettes where a campaign might lead people to stop smoking and actually feel the financial and health benefits pretty quickly.
Perhaps competition is better. A league table of carbon emissions anyone? Each week your shop, hotel, university department, council department, business unit - you name it - competes with each other to see who has kept their emissions the lowest compared to last year. Would this work? The government likes them for schools and hospitals but has it improved standards?
What about a diktat? You will reduce emissions by 10% or...what? The sack? Less money? Perhaps it should be more positive: reach a 10% reduction and you will get half that saving. If that's a few bob, then that might motivate people.
I actually have no idea what might work the best, but our team is going to trial all three out and report the findings to Adnams. I'd love to know what you think or if you have any ideas that might motivate people. Let me know and maybe we can trial them.
The team is doing a fairly straightforward carbon footprint project, but the difficult bit is trying to attempt to link the carbon data to behavioural change. In Adnams' hotels up to 20% of emissions, and, possibly more, could be reduced by staff using less electricity or heat. The key question is: what would persuade staff to use less energy? The answer is the climate change equivalent of the Holy Grail.
What motivates you to actively reduce emissions? Some of you are aware of what needs to be done and act accordingly, but is an awareness campaign enough for those who are less bothered? And, what kind of awareness campaign: a softly softly approach or one that frightens them? It's not like cigarettes where a campaign might lead people to stop smoking and actually feel the financial and health benefits pretty quickly.
Perhaps competition is better. A league table of carbon emissions anyone? Each week your shop, hotel, university department, council department, business unit - you name it - competes with each other to see who has kept their emissions the lowest compared to last year. Would this work? The government likes them for schools and hospitals but has it improved standards?
What about a diktat? You will reduce emissions by 10% or...what? The sack? Less money? Perhaps it should be more positive: reach a 10% reduction and you will get half that saving. If that's a few bob, then that might motivate people.
I actually have no idea what might work the best, but our team is going to trial all three out and report the findings to Adnams. I'd love to know what you think or if you have any ideas that might motivate people. Let me know and maybe we can trial them.
Wednesday 10 June 2009
Selling Hot Air part two
The Carbon Reduction Commitment (CRC) is something we're going to hear more about in the next few months. Unlike the EU trading system, which for most people is off their radar, the CRC is carbon trading coming closer to home.
From next year, any large organisation in the UK will now have to measure their carbon emissions for energy use and from 2011 they will have to buy carbon allowances (permits) at £12 a tonne of CO2. By large organisation, we're looking at companies that have a turnover of over £50million a year. Under the EU trading scheme, it was very energy intensive companies involved, but the CRC includes supermarkets, car dealerships, commercial property owners, colleges, schools, hospitals and government buildings.
Whereas I was suggesting that the EU trading system has a price floor, the CRC has one and prices cannot fall below £12/tonne. In addition, there is a league table of all companies involved - the less CO2 you emit the higher your league position. This last bit of legislation is very clever: companies might be tempted to pay the cost of pollution by buying carbon allowances, but now they have to consider the impact on their brand if they have a low league table ranking.
Gradually, the UK is carbonising its decision making. If you're a school and you want IT equipment, the person in charge of the budget will need to know what is the carbon impact. Less impact means less cash needed to buy carbon, or more income from selling surplus allowances to carbon hungry businesses. Building a new supermarket will need require calculations on how much future energy it will use to appraise the extra costs of buying carbon allowances. If a school is switching to low carbon IT equipment, then providers will need to go greener themselves; if Tesco are building a green supermarket (and, before you laugh, they are actually doing this!) they will need green architects, builders and so forth. Low carbon decision making will be forced on smaller firms whether they like it or not. The smart ones will be ahead of the game and gain extra business.
The CRC, if it has a successful launch, is likely to be replicated across the EU and the US. The green revolution is starting...Just one question, when is the government going to tackle the elephant in the room? Who will dare to touch transport?
From next year, any large organisation in the UK will now have to measure their carbon emissions for energy use and from 2011 they will have to buy carbon allowances (permits) at £12 a tonne of CO2. By large organisation, we're looking at companies that have a turnover of over £50million a year. Under the EU trading scheme, it was very energy intensive companies involved, but the CRC includes supermarkets, car dealerships, commercial property owners, colleges, schools, hospitals and government buildings.
Whereas I was suggesting that the EU trading system has a price floor, the CRC has one and prices cannot fall below £12/tonne. In addition, there is a league table of all companies involved - the less CO2 you emit the higher your league position. This last bit of legislation is very clever: companies might be tempted to pay the cost of pollution by buying carbon allowances, but now they have to consider the impact on their brand if they have a low league table ranking.
Gradually, the UK is carbonising its decision making. If you're a school and you want IT equipment, the person in charge of the budget will need to know what is the carbon impact. Less impact means less cash needed to buy carbon, or more income from selling surplus allowances to carbon hungry businesses. Building a new supermarket will need require calculations on how much future energy it will use to appraise the extra costs of buying carbon allowances. If a school is switching to low carbon IT equipment, then providers will need to go greener themselves; if Tesco are building a green supermarket (and, before you laugh, they are actually doing this!) they will need green architects, builders and so forth. Low carbon decision making will be forced on smaller firms whether they like it or not. The smart ones will be ahead of the game and gain extra business.
The CRC, if it has a successful launch, is likely to be replicated across the EU and the US. The green revolution is starting...Just one question, when is the government going to tackle the elephant in the room? Who will dare to touch transport?
Thursday 14 May 2009
Selling hot air
It's coming up to the euro elections: the beginning of the silly season where you can vote for silly parties like UKIP and they actually get seats! Nobody seems to vote on European Union (EU) issues which is a shame because whether we like it or not, most of our laws are EU laws.
Environmentally, there are some interesting things going on at the EU level. For example, just over 40% of EU carbon emissions are covered by a cap and trade system known as the EU Emissions Trading Scheme. Capped in the sense that emissions are not allowed to go over a certain amount, and traded in the sense that businesses can buy and sell carbon to and from each other. Each business gets an amount of carbon credits and they then have to decide whether it's more profitable to reduce their emissions and then sell their surplus credits, not to reduce emissions and buy credits or do a mix of the two. The current price of carbon is around €15/tonne of CO2 and rising.
So far so good: we have emissions reductions and the cap and trade system appears to be working. Well, look more closely and we can see some issues. First, the carbon price has fallen sharply as energy prices have fallen. It was nearly €30/tonne. Some companies - thought to be coal dependent companies - are deliberately buying up the carbon at low prices to continue to invest in coal. There is an alternative: a price floor - the price will not be allowed to fall below a certain amount. This matters as it incentivises firms to invest in renewables and it acts as a carbon tax which many environmentalists have argued for.
Second, so far, most of the credits have been given away for free. So an electricity company can sell its free credits on the open market and make millions of euros. In other words, your electricity bill funded the energy companies' windfall profits. Why not auction them? The government gets the money and can redistribute the funds elsewhere, perhaps to pay for insulating all homes. It's not as silly as it sounds as the mobile phone companies paid billions to buy licences for 3G phones.
Finally, transport is not included in the cap and trade scheme. The fastest growing source of carbon emissions? Aviation. We need to ensure that transport is included with no get out clauses. Nor do we want industries claiming they need a relaxation of the emissions cap due to the recession.
This matters and we need to ask our wannabee MEPs their thoughts on this. We need people who can ensure the people have a voice at the table. You can be sure that aviation, coal and other big businesses do. There's only one political party that seems to have an answer, and it ain't red, blue or yellow.
Environmentally, there are some interesting things going on at the EU level. For example, just over 40% of EU carbon emissions are covered by a cap and trade system known as the EU Emissions Trading Scheme. Capped in the sense that emissions are not allowed to go over a certain amount, and traded in the sense that businesses can buy and sell carbon to and from each other. Each business gets an amount of carbon credits and they then have to decide whether it's more profitable to reduce their emissions and then sell their surplus credits, not to reduce emissions and buy credits or do a mix of the two. The current price of carbon is around €15/tonne of CO2 and rising.
So far so good: we have emissions reductions and the cap and trade system appears to be working. Well, look more closely and we can see some issues. First, the carbon price has fallen sharply as energy prices have fallen. It was nearly €30/tonne. Some companies - thought to be coal dependent companies - are deliberately buying up the carbon at low prices to continue to invest in coal. There is an alternative: a price floor - the price will not be allowed to fall below a certain amount. This matters as it incentivises firms to invest in renewables and it acts as a carbon tax which many environmentalists have argued for.
Second, so far, most of the credits have been given away for free. So an electricity company can sell its free credits on the open market and make millions of euros. In other words, your electricity bill funded the energy companies' windfall profits. Why not auction them? The government gets the money and can redistribute the funds elsewhere, perhaps to pay for insulating all homes. It's not as silly as it sounds as the mobile phone companies paid billions to buy licences for 3G phones.
Finally, transport is not included in the cap and trade scheme. The fastest growing source of carbon emissions? Aviation. We need to ensure that transport is included with no get out clauses. Nor do we want industries claiming they need a relaxation of the emissions cap due to the recession.
This matters and we need to ask our wannabee MEPs their thoughts on this. We need people who can ensure the people have a voice at the table. You can be sure that aviation, coal and other big businesses do. There's only one political party that seems to have an answer, and it ain't red, blue or yellow.
Sunday 26 April 2009
Carbon Budget
We're in the middle of a severe financial crisis and a full blown recession; people are fearful about their jobs and what's around the corner. Green issues are not exactly high on most people's list. So, I think the budget was rather good for green issues. The Greens will disagree, but that's why I vote for them: we need radicals to help change the world.
Lets get a few things straight from the ludicrous hype about the budget. First, debt: we're in so much debt that the government bonds are going to be downgraded and how will we pay for it? First of all, the size of national debt is less than Japan (who have borrowed the equivalent of 171% of their economy); Italy (113%); France (72.5%); and, Germany (64%). It will grow, but will STILL be less than those countries and there is unlikely to be a downgrading of our credit rating! Secondly, tax rates. 50% top rate of tax is not unusual or that high; in fact, the tax burden (the amount of tax paid as % of the economy) will still be LESS than under the tax cuttin' govt spending hatin' Thatcher governments of the 1980s. Anyway, how many people earn over £150,000? Less than 2%. What's the average household income? Around £20,000. Lets get a sense of perspective.
Given the financial mess, the fear was no money or initiatives for low carbon. In fact, there were some significant gains: support for the wind industry; a reversal on policy re: coal fired stations; and, a carbon budget where cuts in emissions were announced. Even the scrappage scheme has some merit as newer cars do emit less CO2and despite what critics say, most of the life cycle emissions of cars come from driving not manufacturing.
OK, it's not enough. Consider South Korea: 81% of it's stimulus package is geared to reducing carbon emissions. But, look closely and you'll find eco groups complaining it's all spin and not enough substance. We need our Monbiots, Goodalls and Green Party to pull us away from complacency, but sometimes we need to look at has happened and give credit where it's due.
Lets get a few things straight from the ludicrous hype about the budget. First, debt: we're in so much debt that the government bonds are going to be downgraded and how will we pay for it? First of all, the size of national debt is less than Japan (who have borrowed the equivalent of 171% of their economy); Italy (113%); France (72.5%); and, Germany (64%). It will grow, but will STILL be less than those countries and there is unlikely to be a downgrading of our credit rating! Secondly, tax rates. 50% top rate of tax is not unusual or that high; in fact, the tax burden (the amount of tax paid as % of the economy) will still be LESS than under the tax cuttin' govt spending hatin' Thatcher governments of the 1980s. Anyway, how many people earn over £150,000? Less than 2%. What's the average household income? Around £20,000. Lets get a sense of perspective.
Given the financial mess, the fear was no money or initiatives for low carbon. In fact, there were some significant gains: support for the wind industry; a reversal on policy re: coal fired stations; and, a carbon budget where cuts in emissions were announced. Even the scrappage scheme has some merit as newer cars do emit less CO2and despite what critics say, most of the life cycle emissions of cars come from driving not manufacturing.
OK, it's not enough. Consider South Korea: 81% of it's stimulus package is geared to reducing carbon emissions. But, look closely and you'll find eco groups complaining it's all spin and not enough substance. We need our Monbiots, Goodalls and Green Party to pull us away from complacency, but sometimes we need to look at has happened and give credit where it's due.
Thursday 16 April 2009
Electric Dreams
Sometimes you get gloomy when studying this Carbon MBA. How on earth are we going to meet these emissions reductions? But, then you get this government initiative on electric cars: here's 5K - go buy one. Has the government finally got it or is this another cynical gimmick?
Transport is the largest user of energy and accounts for 36% of our primary energy. According to zerocarbon britain, if all transport was replaced by electric vehicles this would amount to a reduction of energy usage in personal road transport by 87% if there are no extra cars on the road and we travel the same distance in our cars.
Well, the first thing to remember is that electric cars are not low carbon; they are lower carbon than petrol cars, but the electricity will ultimately come from power stations. Given that renewables will only account for 40% of our energy needs by 2050 and if you want no nuclear and you are unsure about the unproven carbon capture and storage, then that means up to 50% fossil fuels resulting in CO2 emissions.
Electric cars are more energy efficient - they have less moving parts than non-electric cars making them more reliable, and they use less energy for longer distances. The problem is that we don't enough charging points or much choice of cars. We do have one charging point in Norwich at Chaperfield car park, but have you ever seen an electric car in the city?
There are alternatives. We could ration cars or car use - in Paris they have banned SUVs and many cities only allow you to use your cars on alternate days. Bio-fuels are touted as another solution, but if the fuel is produced in Indonesia chopping down rain forests then shipped to the UK, emissions aren't reduced at all. Interestingly, some argue that increasing investment in public transport is another red herring. In the Netherlands, where there is a superb transport network - trams, buses and trains all integrated and run on time - the Dutch actually use their cars more. I didn't believe it either.
Electric cars are the solution and we need the government to push the development of charging points across the country and to offer more than £250million. Will they do it?
Transport is the largest user of energy and accounts for 36% of our primary energy. According to zerocarbon britain, if all transport was replaced by electric vehicles this would amount to a reduction of energy usage in personal road transport by 87% if there are no extra cars on the road and we travel the same distance in our cars.
Well, the first thing to remember is that electric cars are not low carbon; they are lower carbon than petrol cars, but the electricity will ultimately come from power stations. Given that renewables will only account for 40% of our energy needs by 2050 and if you want no nuclear and you are unsure about the unproven carbon capture and storage, then that means up to 50% fossil fuels resulting in CO2 emissions.
Electric cars are more energy efficient - they have less moving parts than non-electric cars making them more reliable, and they use less energy for longer distances. The problem is that we don't enough charging points or much choice of cars. We do have one charging point in Norwich at Chaperfield car park, but have you ever seen an electric car in the city?
There are alternatives. We could ration cars or car use - in Paris they have banned SUVs and many cities only allow you to use your cars on alternate days. Bio-fuels are touted as another solution, but if the fuel is produced in Indonesia chopping down rain forests then shipped to the UK, emissions aren't reduced at all. Interestingly, some argue that increasing investment in public transport is another red herring. In the Netherlands, where there is a superb transport network - trams, buses and trains all integrated and run on time - the Dutch actually use their cars more. I didn't believe it either.
Electric cars are the solution and we need the government to push the development of charging points across the country and to offer more than £250million. Will they do it?
Thursday 9 April 2009
Is it possible to get an 80% cut in emissions?
One of the questions I wanted to answer was how renewables could meet our energy demand. Last week our class had to complete a report on energy demand for the UK.
One scenario envisaged restricted government expenditure on renewables combined with reductions in demand for energy whereas the other assumed a large increase in government expenditure in renewables, but with no restrictions in demand.
Combined Heat and Power (not strictly renewable, but an alternative energy source that captures the heat from power stations and uses it to warm our homes) Biomass (the burning of biofuels), Wind and Tidal were considered to have the greatest energy output for the least cost and the lowest emissions. Our report assumed the continued decommissioning of nuclear power, but, perhaps surprisingly, that fossil fuels will still contribute at least half of the UK’s energy requirements by 2030. Renewables and alternative energy would contribute about 40% of energy requirements by 2030. This is compared to 5% right now.
The bad news is that unless there is a significant change in policy we will miss the 2020 CO2 emissions target of a 26% reduction set by the Climate Change Act 2008. The good news is that the 2050 target of a decrease of 80% will be met. So what does this mean in real life? Well, it depends in part on your faith in people, governments and markets. If the private sector does not sharply increase investment in renewable energy, then the public will have to cut their demand for energy by a lot. That means reducing air travel, use cars less and improving energy efficiency at home. Alternatively, the government could spend billions on renewables - that means higher taxes, but you might be able to fly and drive a lot more if you have the money.
Either way: a reduction in energy demand or an increase in government expenditure on renewables we will have to pay. The alternative is faith in the unproven Carbon Capture and Storage or in the unpalatable Nuclear option. Give me wind any day...
One scenario envisaged restricted government expenditure on renewables combined with reductions in demand for energy whereas the other assumed a large increase in government expenditure in renewables, but with no restrictions in demand.
Combined Heat and Power (not strictly renewable, but an alternative energy source that captures the heat from power stations and uses it to warm our homes) Biomass (the burning of biofuels), Wind and Tidal were considered to have the greatest energy output for the least cost and the lowest emissions. Our report assumed the continued decommissioning of nuclear power, but, perhaps surprisingly, that fossil fuels will still contribute at least half of the UK’s energy requirements by 2030. Renewables and alternative energy would contribute about 40% of energy requirements by 2030. This is compared to 5% right now.
The bad news is that unless there is a significant change in policy we will miss the 2020 CO2 emissions target of a 26% reduction set by the Climate Change Act 2008. The good news is that the 2050 target of a decrease of 80% will be met. So what does this mean in real life? Well, it depends in part on your faith in people, governments and markets. If the private sector does not sharply increase investment in renewable energy, then the public will have to cut their demand for energy by a lot. That means reducing air travel, use cars less and improving energy efficiency at home. Alternatively, the government could spend billions on renewables - that means higher taxes, but you might be able to fly and drive a lot more if you have the money.
Either way: a reduction in energy demand or an increase in government expenditure on renewables we will have to pay. The alternative is faith in the unproven Carbon Capture and Storage or in the unpalatable Nuclear option. Give me wind any day...
Tuesday 17 March 2009
Countdown to Copenhagen09
Two hundred and seventy four days to Copenhagen 09. Who cares? Well, I do, for one, and I'm trying to make sense of amount of information we have on climate change. I started the grandly titled Strategic Carbon Management MBA at the UEA in January and thought I was pretty well informed. Renewables is the future, no need for nuclear and bio-fuels seem troublesome and coal is a really bad idea in the race to reduce carbon emissions.
It's more complicated than that. There are hard choices, for sure, but there's also a lot of muddled thinking. So I'm aiming to get some clarity. For me, I have some key questions:
It's more complicated than that. There are hard choices, for sure, but there's also a lot of muddled thinking. So I'm aiming to get some clarity. For me, I have some key questions:
- Renewables. Will they be enough? If we have solar panels on every house, an increase in tidal and wave energy and continue with our wind development will we be able to cut emissions by 40%?
- How do we change consumer behaviour? We're talking about cutting emissions by 40% in ten years. Can you think of one example where government initiatives or the private sector have managed to achieve such a target in such a short space of time? So what role does carbon marketing have?
- What new technologies are out there? There's been a lot of focus on, say, green cars and how they will assist us to reduce emissions. You can see how revolutionary the Internet has been in the space of ten years. Is there a green equivalent?
- Is there a carbon margin? Kyoto and current UK legislation is focused on tradeable pollution permits making the assumption that the profit motive is essential to reducing emissions. Will this work?
- Finally, if the government is too slow to react will it be too late to reduce emissions or will the market simply adjust prices? In other words, will businesses reflect a carbon price once profits start to decline? Who will this impact the most?
Subscribe to:
Posts (Atom)
