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Archive for November, 2013

UK waters are some of the most ecologically diverse on the planet. On the 21st of November, 27 Marine Conservation Zones (MCZ) were created – the 1st of three designation phases planned to occur over the next three years. These new sites form part of a developing network of marine protected areas, equivalent to around 9% of the UK’s water.

Available scientific knowledge for sites’ ecological and biological features determines whether a site is designated as a MCZ. Essentially, the science draws the line on the map, rather than allowing social reasons to influence the decision process. Restrictions differ depending on what the site is trying to protect; for example, fishing will not be restricted if it does not harm the features being conserved.

Despite the fact that science is the main factor in identifying sites, Impact Assessments are required by law to accompany the designation decisions. An Impact Assessment attempts to identify and quantify/monetise the actual or anticipated social, economic an environmental effects of a decision.

There are 2 important reasons why they are undertaken:

  1. It is important to determine the costs to society of protecting these areas – society should know the implications and costs of protection; and
  2. IAs can help determine management measures within the MCZs i.e. they can highlight a range of available choices on how to manage the area and the strictness of the protection.

Impact Assessments help assess whether the ecosystem offers a valuable service to society (such as offering a safe breeding ground for fisheries) or what the costs of protection are. This information can then feed back in to conducting more scientific research to justify or amend the way sites are managed. For example, if the cost of protecting a certain area of water results in access to a port being severely compromised, there will be a large societal cost. Therefore, makes sense to gather more scientific evidence to identify a scientifically important sub-section to be protected that doesn’t compromise the port.

Although economics doesn’t dictate whether a site is created, it plays an important role in terms of how it is managed; eftec has many years of experience in completing, and contributing to, Impact Assessments concerning the marine environment. In 2011, eftec completed an analysis of the potential impacts of creating a marine protected area around the Pitcairn Islands (see previous blog post on this). We have also created Impact Assessments for the Joint Nature Conservation Committee – enabling a sounder understanding of decisions to nominate marine Special Conservation Areas (2007, 2009 and 2013).

eftec are currently developing economic evidence for Defra on the gains to society of meeting government targets concerning seabed habitats in UK waters. We are also excited to be working with the Marine Management Organisation to help value the marine environment by attempting to quantify the benefits that certain ecosystems offer to society. Finally, we are part of a team to assess the social, economic and environmental impacts of achieving a good ecological status in certain French waters. This project will help determine which measures should be prioritised as part of the French government’s commitment to the Marine Strategy Framework Directive.

Creating networks of ecosystems in seawaters is important due to the mobility of life within the marine environment. It is important to look at marine sites as a network, as the value of a network can be larger than the sum of the parts. Therefore, when conducting Impact Assessments, we attempt to know how different sites link with one another so that a realistic value can be determined. Cumulative assessments should account for network effects and we should not have a narrow mind when performing these studies.

We really appreciate comments. Please think about these questions and offer any thoughts.

Do you value an individual site more if you know it is part of a network?

What kind of information would you regard as most important when designating a marine site? 1. The effect of the site on other species; or 2. The effect of the site on humans? 

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Listening to lots of thoughtful speakers at the World Forum on Natural Capital in Edinburgh, such as the UK’s Natural Capital Committee’s chairman Dieter Helm. The World Bank also highlighting how the emerging data needs to lead to change and the processes for that: such as creating forums in which people can put their problems in context and talk to others facing similar challenges – a bit like weight watchers.

Imagine a world group of countries and corporations concerned about the weight of their impact on nature and the future capacity of natural capital to support our wellbeing – a “weight watchers for nature” if you like. Would the right participants turn up? Like the 1,000 companies that consume 60% of world resources. Peer pressure is needed get them to turn up, based on human stories showing how natural capital is fundamental to individual lives.

How would the meetings work? Participants’ impact would be weighed, their footprint measured, some used to GDP figures might assert that they were in rude health as prosperity was rising. But others might show that when GDP is adjusted to include impacts at natural capital, in some places human wellbeing is not increasing, but declining). In current accounting and GDP figures, nature is usually valued at zero, this is completely wrong. The weight watchers group would soon realise it was using a broken set of scales.

We can’t fix the scales straight away, but we can get them to be more accurate than they are at present. And with better measures, many would see that their weight was not as healthy as they thought, that under their hefty footprint they were crushing nature: cutting of the hand that will feed them and future generations. Some might get depressed and eat more (non-organic, non-fairtrade) chocolate, but some might change. So if the group came back together next year, who would sheepishly sit at the back, having looked under their larger than they realised backsides and found nature crushed and crumpled? And who would be clapped for reducing their weight of impact on nature: The country that had reduced water consumption to stay within the supply available from nature, or the company that has had a net positive impact on biodiversity through its use of land… We are waiting to applaud…

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An Introduction to Feed-in Tariffs

You might already be familiar with the concept of Feed-in Tariffs (FiTs) from the UK FiT programme which was introduced in 2010, or other FiT programmes which have popped up all over the world in the past few years.  The basic purpose of FiT is to provide incentives for national investment in renewable energy technology.  To do this FiT schemes allow and encourage smaller providers (single to double digit kilowatts), including households, to generate electricity from renewable energy for feed-in to the grid.  These small-scale producers are paid a fixed price per kWh produced that is over the market price for electricity and is guaranteed for a long term (16-21 years in Malaysia, depending on the energy source). This premium price makes it worthwhile for them to invest in the initial outlay costs for installing the energy generation technology.

The rates that small-scale providers are offered differ depending on the form of renewable energy used: typically solar rates are higher and hydropower rates are lower, to reflect the efficiency of the technology – for example currently small hydropower generates electricity at a lower cost compared to solar photovoltaic (solar-PV) and is therefore more efficient.  This evens out the playing field for the different technologies so that non-mature technologies (such as solar-PV) will continue to receive investment, instead of investors opting for mature technologies that provide a higher return for cost without subsidy.  In Malaysia, rates can also be added to when the technology used achieves some ideal goals, such as being locally manufactured or assembled, or by using certain technology (see ‘bonus rates’ on the ‘FiT dashboard’ on the SEDA website).

The rates offered are also depreciated annually to reflect that over time as technology progresses, renewable electricity should get cheaper to produce.  So for instance an installation of solar-PV in 2014 will receive a higher annual rate than an installation of hydropower in 2014, but a lower annual rate than an installation of solar-PV in 2013, as it is thought that the solar-PV installation in 2014 would use better, more efficient technology to create a higher electricity to cost ratio.  In the Malaysian FiT programme, the annual rate for hydropower doesn’t depreciate over time, as it assumes that the technology for hydropower is mature and is unlikely to become much more efficient.

The Malaysian difference

The Malaysian FiT programme follows the basic FiT structure described above but differs significantly from other programmes in that it introduces an annual quota.  The quota caps the amount of electricity generation from each source of renewable energy available for the FiT scheme each year and is based on the amount of money collected from the 1% electricity bill charge (see my previous post) from the previous year.

The quota has two main purposes: the first is to ensure there is a maximum amount of money that the government pays out annually for the scheme, and the second is to control what renewable energy technologies are invested in that year, with the purpose of focusing the growth of renewable energy on proven and mature technologies in the short-term, and, once the mature technologies have reached capacity, on technologies that are currently still developing (such as solar-PV) in the long-term.  This means that Malaysia won’t be installing the bulk of the renewable energy technologies that are still developing until later, when they are more developed, which allows them to take advantage of research that the rest of the world have done.

The renewable energy technology available for the FiT scheme in Malaysia are: biomass; biogas; mini-hydro (not exceeding 30 MW), and Solar-PV.  SEDA, the Sustainable Energy Development Authority (SEDA) who is responsible for the management of the FiT believes that Malaysia is not well suited for wind power.

SEDA renewable energy

The National Renewable Energy Installed Capacity by source goals, from SEDA

To combat allegations of corruption, the allocation of the quota is based on a first come first serve basis. Applications are made by the SEDA website and the companies and individuals awarded are accessible on the website.

The obvious downside to the quota is that once the quota has been reached it is likely to disincentivise renewable energy installations.  It is easy to imagine a situation where, once the quota is reached, interested parties decide to wait until the next year to implement.  Once that year rolls around, the quota disappears like Glastonbury tickets but, like Glastonbury, hundreds or thousands are left without quota.  It is hard to say how likely this scenario could be, however the 2013 quota for 20MW Solar-PV disappeared within an hour of it being available[1].

On the flip side, no one can blame Malaysia for being eager to avoid the problems other nations have experienced with an unprecedented large take-up of FiT (see Limu’s take on the UK experience).  It could even be argued that the UK and Spanish FiT programmes had implicit quotas which, once breached, or with the threat of being breached, caused the FiT rate to be lowered (UK) or for the programme to be frozen (Spain).  Given this argument, it is unlikely that the quotas will ever disappear completely, however given time, experience and public support it is possible that the quota could rise to a level where it becomes more of a safeguard to government funds than a limit to the installation of renewable energy.

A note on Solar-PV

Despite the current limited quota for Solar-PV, SEDA seemed to be very excited about the potential for solar.  Malaysia receives a great deal more sun than the UK, from an annual average value of 1,470 kWh/m2 to 1,785 kWh/m2 of solar irradiance in Malaysian cities[2] (compare this to the UK annual average of 950 kWh[3]).  As well as the large electricity generating potential, SEDA were also excited about the ability of solar-PV to ‘democratize energy’, as Solar-PV technology gives all homeowners the chance to generate their own electricity.  This means that if/when electricity prices rise, homeowners do not become hostage to energy companies (although there is only one in Malaysia) and they can also decide to reduce their useage to sell their electricity on for a higher price.  In short, the householder becomes a ‘prosumer’ – both a producer and consumer to/from the grid.  Perhaps SEDA are especially keen on this idea because the pre-FiT programme to promote investment in renewable energy was shelved as (so they tell us) the single Malaysian electricity company refused to offer fair prices to potential producers.

I’m signing off now from sunny Malaysia, but I would be interested in hearing what you think of the Malaysian FiT quota?  Should DECC have established an explicit quota rather than disappoint investors when it prematurely lowered the tariff rate for solar?  How do you think it will affect the growth of renewable energy technology in Malaysia?

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The recently-finished Medmerry managed realignment scheme, on the South Coast, is an excellent example of how society can work with nature for the benefit of all parties.

The £28m scheme involved building 7km of sea walls up to 2km inland and then  ‘making a hole’ in the existing sea wall, thus allowing the seawater to naturally come into the land. This will now protect over 300 homes, local caravan parks and businesses, a water treatment plant and a main road from a once-in-a-thousand year flood. This area was previously prone to flooding; therefore the avoided damage from this scheme will be valuable.

An important reason for the water being allowed to come inland was to create a 180Ha saltwater marshland, thus offsetting the habitats that were lost in the flood protection projects of larger cities such as Southampton and Portsmouth. The creation of this rare saltwater marsh will bring in numerous species. As well as the wildlife reserve, footpaths, cycle paths and bridleways will be opened. As a result, nature-based tourism in the area is hoped to increase, which will benefit the local economy.

By working with nature, rather than against it, the project has benefited both humans and the environment. The scheme has given a home, or resting spot, to wildlife, whilst providing recreational, protection, participation, and tourism benefits to the local community. It is an excellent example of how incorporating nature-based values into decision making can improve society as a whole.

This is the biggest scheme of its kind in the UK to date and it will be observed closely to see if it can be applied to other regions that are threatened by rising waters.

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