Breaking the Link between Growth and Impact: The Challenge of this Decade Peter Young Strategy Director SKM Enviros & Chairman, Aldersgate Group IEMA Conference.

Breaking the Link between Growth and Impact:The Challenge of this Decade

Peter Young Strategy Director SKM Enviros

& Chairman, Aldersgate Group

IEMA Conference Tuesday 15th November 2011

achieve outstanding client success

The next 25 minutes we will:• Remind ourselves where we are heading, it’s getting really

urgent.• Introduce the three key components to give us economic

prosperity whilst changing course for a sustainable future1. Electricity

2. Energy efficiency

3. Resource efficiency

• Ask what are the UK’s Policy Priorities?• Hear my top 4 actions

Keep up, breaking the link between

growth and impact is a big ask!

Where are we heading? Global Population in Billions....

What do youthink we can cope with re:•Carbon Dioxide?•Water?•Food?

3

.....Observed Global Temperaturesand Carbon Dioxide + ...

4

.... Future Carbon Dioxide Emissions to 2100

5

+2oC?

+6oC?

DE-COUPLING GROWTH AND IMPACT: A CALL TO ACTION

UK GHG emissions since 1990: Production down by c15% but Consumption up by c20%


Cities: Design for eg Carbon Intensity


Food Supply and Security

• Food now 23% of global ecological footprint with 2.5bn more to feed in next 30 years

• Eg in UK we need 5.2gha, when 1.7gha is available capacity/capita

• Water use, sustainable nutrients and food supply chain must all be reformed

• Taxation, regulation, procurement and consumer behaviour change are all required - urgently


Carbon - The UK’s statutory targets• 34% cut in emissions on 1990 levels by

2020 –

Energy/resource efficiency is the quickest gain

GHG reduction: illustrative contribution from different sectors

By 2050 UK carbon targets require transformation of whole economy – and transformation means electrification

• Not only de-carbonising electricity generation

• But also to facilitate savings in other energy use emissions categories

• Most sectors rely on more electricity and efficiency

DE-COUPLING GROWTH AND IMPACT:1. ELECTRICITY SUPPLY


Around 25GW will need to be replaced in next 10 years – but...

0

10

20

30

40

50

60

70

80

90

100

2010 2013 2016 2019 2022 2025

GW

Nuclear Coal CCGT

New CCGT OCGT & Oil Hydro

Renew Peak Demand Peak Dem + 20%


...Changing Demand means we need more

• Demand doubles by 2030– Peak in 2010 = ~45GW– Peak in 2030 = ~85GW

• New loads heat pumps / plug in vehicles

• Better storage vital• Potential cost £110 billion

over decade:– £75bn on generation– £35bn on distribution

(>double last 10 years)

Figure taken from Energy White Paper


UK renewables – lots to do


Incentives for renewables• Feed in Tariffs - most successful financial

incentive for renewable electricity - real growth in capacity

• But regular revisions in quickly changing market (though changes not dramatic enough to destabilise the market)

• Need to be economically sustainable• Need clear long term targets

Policies: Feed-in tariffs: a track record of driving investment

FiTs supported: 75% of global PV capacity and 45% of global wind capacity through 2008

Feed-in tariffs (FiTs) are in place in ~28 countries; designs and impact vary widely


2009EU newCapacity26 GW


PV - European success story

Source: EPIA Global Market outlookfor PV until 2015


EU – installed PV as at 2010

Source: EPIA Global Market outlookfor PV until 2015

SuccessReflectsFiTs notSunshine!

DE-COUPLING GROWTH AND IMPACT:2. ENERGY EFFICIENCY

Global Energy Demand


..... Global Energy Inefficiency....

227

DE-COUPLING GROWTH AND IMPACT:3. RESOURCE EFFICIENCY(MATERIALS + WATER)


The True Cost of Wastage

Waste Bill

Energy Bill

Raw Mate

rials

Labour

Handling &

Sto

rage

Transporta

tion

Mainte

nance

Productiv

ity

Other U

tiliti

es

Water Bill

Visible costs 10% Direct use 10%

Hidden costs 90%! Indirect use 90%!

Defra: £27bn/year


Waste Prevention

EliminateAvoid wastage of materials and

utilities at source

ReduceMinimise wastage of materials

and utilities

Re-useUse materials/waste/utilities as

many times as possible

RecycleRecycle (waste/utilities) only after

you have minimised wastage

Recover ValueRecover the energy from any

remaining waste/effluent/emissions

DisposeDispose of

waste/effluent/emissions in a responsible way

Waste Management

Prevention vs Recycling Multiplier (CO2e)


One Case Study: Process Efficiency • Toiletries manufacturer • £16m turnover• £20k waste bill, but ....• 3% mixing and filling losses• 5% product never sold!

Process Opportunity Estimated Cost Saving

Estimated Environmental Saving (Product Waste)

Expected Investment

Mixing 80% cut in residue losses £125K 62,600 litres of material/effluent £20K?

Filling 80% cut in cleaning losses £200K 100,000 litres of material/effluent £10K?

50% cut in overfill losses £525K 262,500 litres of material resources £100K?

Labour efficiencies in capping operation £200K £150K?

TOTAL £1,050,000 425 m³ £280,000

WHAT ARE THE UK POLICY PRIORITIES?

1) Build on a great platform, UK has led in long term policies – Climate Change Act, Statutory Carbon Budgets

2) Deliver on promising new initiatives of Green Investment Bank, Green Deal, Natural Environment White Paper (Natural Capital Accounts) and Electricity Market Reform

3) Remove uncertainty; and clarify and simplify wherever possible

4) Build credibility to encourage bold international decisions at Durban, Rio +20

5) Demonstrate that green growth and sustainability is at the core of all future UK economic policy and support


Example - Decarbonisation of Energy Supply and Use.... Clear enough yet?

Decarbonise Electricity Supplies

Decarbonise Heat

Supplies

Energy Efficiency

Utility Energy

Supplies

Industrial Energy Users

Commercial Energy Users

Electricity Market Reform

EUETS

RHI

CCAs CRC

FITSRenewable Obligation

EUETS

CCL Exemption for CHP

Building Regulations

Green Deal

Domestic Energy Users


Electricity Market Reform - TimelineYEAR 11 12 13 14 15 16 17 18 19 20

Legislation

FITS with CfD

Capacity Mechanism

CFP

EPS

Transition to CFD

Primary Leg.

Secondary Leg.

*First CfD signed *possible first payments

*Capacity procured as required

*CFP rising incrementally (£16 to £30)

*EPS in force

RO open to new gen. Choice RO or CfD. RO vintaged

FiTs - Feed in Tariffs; CfD - Contracts for Difference; CFP- Carbon Floor Price; EPS - Emissions Performance Standard; RO - Renewable Obligation


Electricity Market Reform – don’t forget energy efficiency

1. DECC to have new office “to drive a step change in national energy efficiency in autumn of 2011”

2. DECC will “work with leading industrial experts to drive further carbon abatement across the economy”

3. DECC focus – heating and cooling

4. Incentives for Energy Efficiency will be assessed by Government over coming year


Aldersgate Group’s ‘Growth Statement’

1) Streamline climate change & energy policy to raise ambition; reduce complexity; drive more investment in energy efficiency.

2) Clear rationale and objectives to meet the commitment to increase the proportion of tax revenue from environmental taxes.

3) Ensure the sectoral growth reviews and enterprise zones are driving forces for a green economy.

4) Put the Green Investment Bank at the forefront of the growth strategy by ensuring it can borrow on inception and pass legislation by 2012.

5) Following publication of Skills for a Green Economy, work with business to develop a comprehensive action plan to address green skills gaps.

6) Enhance public procurement role and increase support for research, development and demonstration (RD&D) to drive innovation.


1. Recognition that sustainable growth is the only growth that is ..err... sustainable

2. Clear long term policies and frameworks that tell investors there will be no U turns – evolution not revolution

3. Relentless pricing of the environment and taxing ‘bads’ (carbon, pollution) not ‘goods’ (jobs, income) so the greener businesses will thrive and drive growth

4. Me and you! Individual responsibility and behaviour change

In Conclusion: My top 4 actions to De-Couple Growth and Impact:

Breaking the Link between Growth and Impact: The Challenge of this Decade Peter Young Strategy Director SKM Enviros & Chairman, Aldersgate Group IEMA Conference.

Documents

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global energy demand

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carbon intensity slide