Get your 4 a day

No I don’t mean 5 a day. Not even 7 a day if you live in Australia. I mean 4 a day.  4 power outages a day. This is what people in Lebanon (and no doubt other countries which I haven’t been to in the last 2 weeks) have been experiencing over the last two months or so. During my stay, I counted a total of 31 power outages in the span of 8 days which equates to an average of around 4 power outages a day.
Having 4 power outages a day makes you obsessed with – wait for it – power outages: When did the power go out? When is it coming back? How long has it been since it went out? Shall we turn the generator on? The big one or the small one? How many A/Cs can we turn on?
Besides becoming positively obsessed with power outages, the whole situation makes you appreciate things that you almost certainly always take for granted. ‘Power’ in most countries is contingent upon the provision of oil and gas – a component of natural capital. There are other components of natural capital, from many different habitats, providing things we need which are much more undervalued or not valued at all such as climate regulation, water regulation and biodiversity (among others). The troubling thing is that there are many alternative sources to generate power or electricity but alternatives to ensure the preservation of climate regulation, water regulation and biodiversity are much more difficult if not arguably impossible to conceive of in this context. Just a thought I had in trying to make the most out of power outage number 12.

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Are you listening George Osborne?

The UK economy stands to lose hundreds of millions of pounds of investment in gas-powered plants and offshore wind farms unless the government can provide guarantees about its future carbon policy plans, a leading article in The Times warned on Monday[1]. Seven ’global electricity and nuclear technology’ firms have written collectively to the Energy Secretary Ed Davey and to the Chancellor George Osborne, voicing their concerns over a lack of commitment to the delivery of climate change targets and a watering down of energy policy targets’.  The letter was one of two letters from ‘UK plc’ yesterday asking George Osborne to commit to these targets, the other coming from the Aldersgate Group – a coalition of companies committed to moving towards a green economy[2].

Their concerns come as yet further disagreements within the coalition emerge, this time over whether to pursue the policy recommendations of the Committee on Climate Change (CCC). The CCC recommends that 50g of CO₂ should be generated per kilowatt of electricity compared to the current 400GCO₂/kW (a 87.5% reduction), something that the Chancellor views as undesirable because of the higher energy cost burdens it imposes on UK businesses. The Chancellor’s argument runs that the higher costs of low carbon technologies would be passed on by energy firms to ‘UK plc’ thereby stifling economic growth as the potential for expansion in employment and productivity in these firms would be reduced.

The reason the CCC was set up was to try and avoid the 5 year political cycle, yet if the government ignores its advice then surely they become a toothless body subject to the whim of politics and their function becomes less of a comfort to those who worry about these sorts of things.

Unfortunately, as a result of George Osborne’s’ lack of commitment to a low carbon economy, energy firms remain reluctant to commit capital investment in such technologies, being unsure of the comparative advantage that it will deliver in the future. In a future where we are committed to lower carbon energy generation, it is likely that there would be higher taxes on carbon intensive energy generation, so investment in low carbon technologies now is a good idea. However without this commitment to lower CO₂ targets, energy firms have no incentive to invest in such technologies and will continue to invest in cheaper higher carbon technologies, lest they risk losing out to their competitors.

So in order for a low carbon renewable technology economy to really take off, the government must commit in the long term to stringent targets for CO₂ set out by the CCC. Only then will we see the required investment in low carbon technologies and significant advances in employment levels and productivity in the emerging low carbon or ‘green’ economy. And only then will we begin to have any chance of meeting our climate change targets and avoid the large costs associated with a failure to act (see next post).

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[1] The Times. Go green or we quit Britain, energy firms tell Osborne. Sam Coates. October 8 2012.

[2] The Guardian.Firms call on Tories to back 2030 carbon target for power sector. Fiona Harvey. October 8 2012. 

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FITS IV

– experiences of fitting household solar energy – Getting FITS III is part of a series of blog posts by Limu on the attempt to install solar power at home with the help of the UK Feed in Tariff.

Despite the UK’s historically low interest rates it doesn’t seem that my mortgage lender is keen to lend out money to existing customers – quoting me exorbitant rates (over 6%). This is the problem that has been highlighted in the media about the availability of bank lending holding back investment. I want to employ local tradesman for a week’s work, and have a good credit rating, but without the lending the economic activity will remain a hope. George Osborne take note.

Given the financial payback from Government for FITS, an interest-only mortgage would seem like a good option. This requires confidence that we’ll have more money in the future, a big assumption requiring good reasons. The main ones for us are that the state is starting to pay for educating and therefore caring for our children. That means we won’t have to, and that having moved house, my wife isn’t in work, but has excellent skills so will be sooner or later.

There are other financial models that would work in this situation. A company could lend me the money in return for receiving the FITS subsidy payments until they had recouped their capital and some interest on it. Another option would be for me to rent the roof space to a third party. Either case would require a contract where I was responsible for keeping the energy generation going, and therefore the FITS payments flowing. But that could just involve allowing access to a maintenance company, so should be possible.

The UK’s ‘strength in financial services’ is much lauded in the press. I often wonder if it isn’t part self-justification for bankers earning super-normal profits. In this case it isn’t providing the solutions to broker a deal that should be profitable on all sides – an example of opportunities in the green economy not being taken.

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Keeping the carbon cutting commitment

Though not officially announced, the news on the grapevine is that after days of disagreements the coalition government will agree to implement the recommendations set out by the Committee on Climate Change to meet a target of a reduction of 80% of carbon emissions in 2050 compared with 1990 levels (590Mt), with an intermediary target of 60% by 2030 [1, 2].  The UK CO₂ emissions for 2010 have been provisionally estimated at 492 Mt (a reduction of 17% from 1990 levels) [3].

Reaching these targets will involve substantial changes to the UK electricity source and coincides with the EU Renewable Energy Directive, which states that the UK must generate 15% of energy through renewable sources by 2020 [2, 3].

Other ways to reduce emissions will include reducing carbon intensity in the transport sector, which is also covered by the EU’s Transport Policy which aims to reduce conventionally (petrol and diesel) fuelled cars  by 50% by 2030 and eliminate them altogether by 2050 [4] and increasing energy efficiency in homes and work places.

This target is great news and, as it was first proposed by the Labour government [5] and will now be accepted by the Conservative/Liberal Democrat coalition, is unlikely to be overturned in the near future by a change in government.

Things to look out for:

1)      The incentives the government must put in place to ensure that the UK achieves its carbon targets. As the UK is not a command and control economy, government cannot simply dictate that emissions be dropped. Instead, incentives and disincentives must be put in place in order that industry will move themselves towards these targets. Examples include subsidies (including tax breaks) and taxes.

2)      Will carbon trading be part of the agreement? Will the government allow targets to be achieved through buying carbon offsets (paying for carbon reductions) in other countries? Whether this is allowed or not will affect how this deal changes the UK economy and infrastructure. Insisting that all carbon reductions be made within the UK will have a considerable impact on the UK economy and infrastructure and could pave the way for the UK to lead the way in green technology. Allowing for emissions to be offset in other countries will mean that only immediately cost-efficient changes to the UK economy and infrastructure will be carried out.

3)      Unaccounted exported emissions. A frequent argument against the claim that the UK has reduced carbon emissions since 1990 is that we have outsourced our emissions by importing products produced in developing countries such as China – production emits greenhouse gases and often times the production process is more carbon intensive than it would be in the UK.  It is unlikely that this will be included in the UK official carbon count, but we should all keep this in mind [6].

Read more:

[1] Coalition commits Britain to legally binding emission cuts – Toby Helm and Robin McKie, The Guardian

[2] Committee on Climate Change – Renewable Energy Review

[3] DECC – UK Emissions Statistics – 2010 UK Provisional Figures

[4] THE EU HAVE MADE ANOTHER COMMIE DECISION AND THE SKY IS FALLING!!! – Cowburps

[5] Heat and energy saving strategy consultation – DECC

[6] UK’s total emissions set to rise: new data obtained by PIRC – Guy Shrubsole, ClimateSafety

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Doing, not paying…

It seems as environmental economists that a lot of our work involves translating carbon into monetary terms. What is the value of avoiding the emission of a tonne of carbon? Should we value it by the damage it would cause or by the opportunity (of the actions of which carbon is a byproduct of) lost by not emitting it?

Last night I went along to the launch of The DoNation – a very interesting concept that does almost the opposite – it provides a service for people to ask their friends to sponsor them – not with money, but through changing their behaviour over a period of time to reduce carbon. Examples of this include air drying your clothes instead of using a tumble dryer, going vegetarian a few days a week and cycling to work.

I ‘sponsored’ the London to Morocco bike ride that kicked off the first incarnation of the website by going vegetarian for 4 days a week. Last night we learnt that collectively we had saved 16 tonnes of carbon – enough to fly from London to Morocco every day for each day of the bike ride! Even better, many are still continuing their actions, leading a lower carbon lifestyle (although I have gone back to omnivorous ways most days of the week).

This concept to me is beautiful in several ways:

1. Those who are concerned about climate change can ask their sponsors for something they actually want – and not through a roundabout way of asking for money and then buying carbon credits.
2. It motivates people to change their behavior – from people who would never have changed their behavior otherwise to people who have already realised it would be a good idea but never got around to doing it; and
3. It employs one of the biggest motivators to engender that behavior change – friendship (it has also, for me, kickstarted other friendships with its capacity as a great conversation starter – “I’m eating vegetarian today because this girl I know is cycling to Morocco…”).

To check out The DoNation and start Doing, head on over to www.TheDoNation.org.uk

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Friends in high places

The world’s best-known environmental economist, Lord Stern, has highlighted the environmental impacts of eating meat. Like us, he is concerned with emissions from livestock production:

“Meat is a wasteful use of water and creates a lot of greenhouse gases. It puts enormous pressure on the world’s resources. A vegetarian diet is better.” (1) He was supported by the famously hairy Prof Bob Watson (2), “When you look at the livestock industry, it’s not just the cows burping methane, it’s transporting the meat, it’s cooking the meat, it’s storing the meat. It’s not stopping eating meat. It’s how do we get a balanced diet that reduces the environmental footprint.”  Its good to know that such a comprehensive and balanced view of the environmental predicament behind cowburps exists in Government.

 (1)    http://www.timesonline.co.uk/tol/news/environment/article6893037.ece

(2)    Chief scientific adviser at the Department for Environment, Food and Rural Affairs http://www.timesonline.co.uk/tol/news/environment/article6891362.ece

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