The UK has formally signed up to the Paris climate change agreement – Sky News

 

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Sky News: The UK has formally signed up to the first climate change agreement that covers every country on earth. It comes as there is uncertainty over America’s role in the Paris Agreement. Donald Trump had described climate change as a hoax invented by China. I’m joined now by Tom Burke, chairman of Third Generation Environmentalism, and former senior advisor to the Foreign Secretary’s special representative on Climate Change. Good evening to you, Tom Burke. So the UK has formerly ratified this, signed up to today. What is the significance of the Paris Agreement?

Tom Burke:  Well the real significance of the Paris Agreement is the way that it represents a real turning point when the political risk equation is changing, for governments now the political risk of failing to act on climate change is increasing, meanwhile the political risks of acting is decreasing, as the cost of renewables goes through the floor. So the events that the scientists have been predicting are now happening with increasing frequency, and really driving home to political leaders everywhere that this is a problem that is going to have major political impact on people’s prosperity and their security, and at the same time we are seeing that the cost of dealing with the problem are really going through the floor, as the cost of renewables goes down, the cost of storage goes down, we are beginning to see people take up all of the opportunities in a low-carbon economy.

Sky News:  Yeah, what about the political risks, as you describe them, of Donald Trump?  Who is a climate sceptic, he has previously claimed that climate change didn’t exist and he has threatened to pull out of the Paris Agreement, and promised a coal revival.

Tom Burke:  Yeah, he is probably a political risk to more than the climate as well. But the reality is that there is not a huge amount that he can actually do to stop the momentum. He can certainly slow down the regulatory push. He can do things domestically that mean that legislation doesn’t drive a low-carbon economy forward faster in the US. He can’t really do much to stop the international community going forward. If you remember the Bush Administration pulled out of the Kyoto Protocol, meanwhile the rest of the world got on with it and achieved the objectives. In that sense he can’t stop the world going ahead. The Chinese aren’t doing something about climate change because they care about what the President of the United States is thinking, they are doing something about climate change because it immediately affects their people, and they are going to go on doing that. So I don’t think that we are going to see a very dramatic change globally. Domestically, in the US, I think that we are going to see a slowing down of their efforts there. But you have to remember that in the US the reach of the president doesn’t run everywhere, there are going to be a lot of states, like California and other states, that are going to go on driving forward to take up the opportunities in a low-carbon economy, there are going to be a lot of cities going ahead and doing things, so I don’t think that we are going to see quite the same cataclysm that some people have said. I think we are going to discover that Elon Musk, the guy who is producing the electric vehicles at Tesla, is a much better businessman than Donald Trump.

Sky News: You talked about the costs of dealing with the problem of climate change, and I wonder if the economics might influence Donald Trump to change his position slightly, he is a businessman; he is a numbers man after all.

Tom Burke: I think that you are right about that. What might well influence Donald Trump, as it really should be influencing our own government, is the fact that the rest of the world really is moving on very fast with an energy transition, an energy revolution, that really is driving forward towards low-carbon. And because we have been a bit incoherent in our policy, are getting left behind, and there is a real risk that if Donald Trump does what he has been talking about, then the same thing will happen in the United States. So we will be surrendering massive amounts of market opportunities to the Chinese and the European countries, that are getting on with the energy revolution.

Sky News: How bigger challenge is it to meet this commitment that the Paris Agreement sets, and what changes will the UK and other countries have to make in order to do that.

Tom Burke: It is a very big challenge to meet it, and we are not going fast enough with what we are doing, so we are going to have to do more. Now that was recognised in the Paris Agreement, it was recognised that this was a start, and that we would have to keep upping what we are doing regularly. There is a so called ratchet mechanism that would drive things forward every five years. So we are going to have to go faster. What I suspect will happen is that we will end up making much better use of our resources in generating capacity, being much more efficient in the way that we use energy in our own homes, lowering our own bills, and in particular in many parts of the world it’s going to improve air quality, as we take out the emissions from vehicles and from power stations. So actually what we are going to see as we get on with this energy revolution, is lots of aspect of our lives improving, not just reducing the threat of climate change.

Sky News: And if we needed a reminder of why the Paris Agreement is necessary, we had the news this week that it is the warmest year on record.

Tom Burke: I think that is absolutely right, and we have seen this year, for instance, the hurricane season in the Indian and Pacific oceans was very aggressive. We are seeing a huge increase in the number of deaths and the amount of damage that is done by extreme weather events, and that is only one of the manifestations of an increasing climate. Almost every year this decade has been warmer than the year before, and that is a pretty alarming sign, as we what that scientists told us twenty years ago was going to happen, is actually happening a bit faster than they said.

Sky News: Ok. Tom Burke, thank you very much for joining us this evening on Sky News.

 

 

 

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IEA projection of oil consumption peak goes against what many in the industry believe – Share Radio

 

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Share Radio:  Let’s take a look at oil, because oil consumption is tipped to peak no sooner than 2040, even if the Paris climate agreement is implemented, that is according to the outlook of the International Energy Agency, the IEA. This projection goes against what many in the industry believe, such as the CFO of Shell Simon Henry, who predicted that supply could peak within 5 to 15 years. So who is right? For his thoughts on this story, I am joined on the line by Tom Burke, who is Chairman of E3G, Third Generation Environmentalism. Tom, a very good day to you, what’s you take on this report?

Tom Burke: Good Afternoon. I think it reflects the reality that we are going to see a very volatile future for the oil price, as the cycle of investment slows down, and that works through to prices. But into that gap I think that we are going to see a far faster acceleration of the deployment of renewables than the IEA is currently projecting. All their previous projections for the rate at which the cost of renewables will go down and the uptake of those renewable will go up, they have all enormously underestimated the take up of renewables. The same is true of storage and the cost of batteries and the way they are going down. So I suspect that the long run future for oil is going to be closer the Simon Henry’s view than the IEA’s view.

Share Radio: Which is quite extraordinary really, because not many people would have actually thought that someone who head up, or is at least a key player in, an oil company will actually say, you know what, demand for our product will actually tail off in between 5 and 15 years.

Tom Burke: Yes, but there is some wrinkle that you need to be aware of in Simon’s decision. Shell is now mostly a gas company, more of its product is gas than oil, and so what you’re really looking at is to petrol consumption, because the bulk of oil is used in transport, and the high value piece of that is in petrol for vehicles and I think that what we are going to be seeing is a race between Elon Musk and the oil companies, for how quickly we drive forward with electric vehicles. And if that takes out the top end of the barrel, then it is much more likely that Simon Henry will be right, than it is that the IEA will be right.

Share Radio: Yes, but clearly if that forecast holds true, and it really is putting pressure on the oil companies, the other players in the field, to have their “wake up and smell the coffee moment”, unless this is it.

Tom Burke: I think that you are absolutely right about that. And I think that what is very important to bear in mind is, that if Simon Henry is right, the consequences for everybody are quite dramatic. We get in Britain, around 60 billion per year in tax revenues from the oil and gas industry, and we get about 20% of our pension fund dividends, so you would begin to see an impact, over that time frame, you will begin to see an impact on those revenue flows and tax flows, and we need to be pretty thoughtful about how we replace them.

Share Radio: And certainly, if we take Simon Henry’s forecast, and that really does appear to suggest that oil prices will fall under phenomenal pressure, and we have actually seen that this year, how oil went from three digit growth around 2015, and before that in fact, to where it is now registering at about 45-50, dollars per barrel. So if it begins to deplete where can we actually see prices being if we look forward? Could we actually have a return to those three digits?

Tom Burke: I doubt it. Well, you could get spikes where the price goes up. You’ve got the underline transition out of whatever is going on, especially if interest rates go up, and the world continues to be pretty turbulent politically, then you are going to see a deep reluctance in being will to invest in the kind of project that the oil companies run, which are highly capital intensive, very long life projects, with a big gap between spend starting and revenues coming in. I think that there will be a real lack of appetite for those kinds of projects. Renewables are going to look much more attractive, because they are much lower capital intensity, you can do them on a much more modular scale. So in terms of capital allocation, it is easy to see how in these circumstances of very high volatility and political turbulence, investment in renewables doesn’t only look more appealing from an energy or climate perspective, it also looks more attractive from a financial security perspective.

Share Radio: And given the pendulum swing as well we shouldn’t forget that the move away from oil does have geopolitical ramifications as well, particularly for the likes of OPEC.

Tom Burke: I think that’s exactly right. Mr Putin is pretty dependant on oil revenues for sustaining his popularity at home. I would be more concerned about what we do about countries like Mozambique or Egypt, for whom a gas resource is a very important part of their ability to generate revenues going forward. So you are absolutely right, there could be very significant geopolitical consequences, if we don’t think through how this is going to work, and what else we need to do other than sit in our cars and take advantage of low petrol prices.

Share Radio: Yes of course. In the introduction I mentioned the Paris climate accord, negotiated in fact in December last year, so where does this fit into the jigsaw puzzle, because they set emission targets and of course there are concerns as to whether America can fulfil those targets given the change at the White House next year, and Donald Trump’s own scepticism about global warming.

Tom Burke: Yes, I get that. I think that is important. I think the thing to remember is that Paris marked a really significant turning point in the whole debate on climate change. Really what’s happened now is that the political risks to governments of not doing something  on climate change are growing, and the political risks of doing something are falling as the cost of renewable falls. So you have more extreme weather events, more of the effects that scientists have predicted occurring, putting real pressure on governments to do something, meanwhile the costs of doing something are going down. Up until Paris, the regulatory push was the thing that was driving us towards a low-carbon economy, but what I think that we are beginning to see now is a much stronger opportunity pull. Now Mr Trump can maybe slow down the regulatory push, though probably not as much as he thinks, but he can’t do anything to stop the opportunity pull. So what you are seeing is the Elon Musk’s, the people with better technologies, really coming in. If you think about the IEA projections about the oil going out to 2040, 60% or more of fossil fuel use is waste heat. To start a company like Uber or Air BNB, that is exactly the kind of thing that looks like an opportunity, to eliminate that waste heat.  I think that we are going to see a lot more creativity in that sort of area. So I think that things will happen faster and the opportunity pull will become increasingly important as we go forward.

Share Radio: Ok Tom, we have to leave it there. It was an absolute pleasure speaking to you. That was Tom Burke who is chairman of E3G, giving his reaction to the IEA’s latest oil report. Basically, saying that oil consumption will peak no sooner than 2040. Although that view puts them in collision with the CFO OF Shell who predicts that supply could peak within 5-15 years. A debate which will go on, I’m sure, for some time.

 

 

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2016 is set to be the hottest year on record – BBC News – 14 Nov 16

 

 

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BBC News: Let’s talk to Tom Burke, Chairman of the environment think tank E3G, also a former government advisor on climate change. Thanks for being with us. So, 2016 looks set to be the warmest year on record, following 2015, that was the warmest. Is this just going to go on and on progressively?

Tom Burke: Yes. That’s the thing this is cumulative problem. It gets worse if you don’t do something about it. It will get worse year on year. And the problems for people’s lives, for prosperity and for security, will also get worse.

BBC News: So for people like Donald Trump the new president of the United States, who has said in the past that climate change is a hoax, or the idea that climate change is man-made is a hoax, is this evidence to the contrary?

Tom Burke: Yes, it’s very definitely evidence to the contrary. Mr Trump is going to have to deal with reality, and understand that science doesn’t pay any attention to the illusions, or delusions, of politicians, in this case. There is very little that he can actually do to stop the rest of the world from getting on with what it wants to do. We are seeing in Marrakesh now, the reaction of other counties has been to say, well, we are going to go on anyway.  He can slow down the way that the world addresses the problem, but he can’t actually stop it. As indeed his predecessors found out, when Bush pulled out of Kyoto protocol, the rest of the world went on and delivered what it had set out to do.

BBC News: But he has threatened to pull American out of the climate change agreement, surely that would be an enormous blow to that agreement, wouldn’t it?

Tom Burke: It would be a blow, because it would reinforced those laggard countries to keep trying to slow things down.

BBC News: Who are the laggard countries?

Tom Burke: Countries like Saudi Arabia for instance, and Russia to some extent. But only part of the response to climate change is being driven by a regulatory push. There is now an enormous amount on opportunity pull, pulling people into a low-carbon economy. Elon Musk, and the delivery of electric vehicles lowering the cost of storage, for instance. You’re not seeing a simple idea, to constrain the economy from putting more carbon into the atmosphere. You’re seeing lots and lots of people seeing how they are going to make money, and make the economy work better, by actually delivering that low-carbon economy.

BBC News: And now even China is getting in to renewables in quite a big way.

Tom Burke: China is expecting to make and absolute fortune from electric vehicles in the same way that it has done with solar panels, by getting ahead. And that is the danger for America, of Trump pulling it out, is that America gets left behind in and energy revolution that is going on all over the world, and gathering pace.

BBC News:  So actually, you sound quite optimistic? The world is getting its act together if you like. But is it too late?

Tom Burke: It might well be too late. I think that is part of the news that we are hearing now. We are at 1.2 degrees. Climate begins to get really unmanageable when you pass 2 degrees of temperature rise, so we’re not going fast enough, that’s for sure. So I am optimistic in the sense that Mr Trump can’t stop us from doing things, but I do think that were are not doing enough, and we are not doing it fast enough to really tackle the problem.

BBC News: Great to talk to you Tom Burke, thank you so much for being with us.

 

 

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Evidence submitted to the House of Lords Economic Affairs Select Committee investigation into energy policy

 

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Evidence I submitted to the House of Lords Economic Affairs Select Committee investigation into energy policy

 

In justifying its decision to go ahead with Hinkley the Government has emphasised the fact that EDF will bear its construction risk. This is true, albeit with some generous performance standards. However, the commercial risk will fall wholly on Britain’s energy consumers. This underlines the importance of the judgement of whether or not this investment represents value for money.

The Government’s three page assessment of this question amounts to little more than an invitation to take its word for it. Not enough evidence is provided to make any independent assessment of the validity of its conclusions. The recent NAO report on Hinkley provides a reason to treat them with considerable scepticism. It found that the Government’s own estimate of the additional cost of Hinkley to consumers had increased fourfold between October 2015 and the report’s publication in July 2016.

The contract with EDF to build Hinkley does not represent value for money for consumers. It is a 35 year index linked ‘take or pay’ contract at an additional cost to consumers of £37 billion for 90% of 3.2GW of electricity. The attached schedule lists some of other options that are cheaper, faster, cleaner and more reliable ways to meet our need for affordable, secure low carbon electricity without Hinkley.

The costs of renewables and batteries continue to fall each year. It is likely that they will have fallen sufficiently to no longer require subsidy before Hinkley is operational. There is no likelihood that nuclear costs will have fallen below the need for subsidy across the whole of the proposed 16GW programme, not the least because the Government is repeating the mistake of the AGR programme in having four different vendors each offering a different technology thus eliminating even the prospect of series learning.

The Government seems unaware of the profound changes that electricity systems are undergoing globally as the digital revolution transforms them. It continues to formulate policy in terms of technology choice rather than system architecture. This prevents it from securing the best available package of benefits for both consumers and taxpayers.

There is a very broad consensus on the goal of Britain’s electricity policy. It must provide electricity that is secure, affordable and low carbon. Currently, peak demand for electricity in Britain is about 60GW for a very short time on the coldest day. Baseload, the demand that must always be met, is some 30GW. The total generating capacity available to the grid is some 85GW.

This means a great deal of our national investment in electricity generation capacity is unproductive – generating no electricity or revenue much of the time. The critical policy question is how best to match demand and supply so as to make the most productive use of our investment in generating capacity. This is a more useful question than simply asking what technology should be chosen to replace retiring capacity.

Modern data handling capacity and sophisticated software makes it possible to do this much more effectively than was possible even in the fairly recent past. This puts premium on flexibility rather than volume. Both the economics and the nature of the technology make nuclear very inflexible and thus a bad fit with a system architecture that is seeking to maximise flexibility in order to improve capital productivity and lower costs to consumers.

Two examples make this point.

In order to maintain security of supply a grid containing Hinkley must have 3.2GW of additional supply instantly available in case of an unplanned outage – these occur frequently in the current nuclear fleet, largely for non-nuclear reasons. Supply from renewables is variable but its variability can be forecast

with high confidence thus permitting a wide range of flexibility measures to be brought into play at lower cost.

On current forecasts we are likely to be able to meet our baseload demand entirely from zero marginal cost renewables for long periods during the year during the twenty thirties. Under the contract with EDF we would have to forego 3.2GW of that zero marginal cost supply in order to use the electricity from Hinkley.

Hinkley, and the rest of the nuclear programme if financed on a similar take or pay basis, would, in effect, set an unjustifiably high floor on the price at which electricity could be supplied to consumers.

Furthermore, the current 16 GW programme represents a £100 billion bet that electricity systems will retain essentially its current architecture over the next fifty years.

In short, the Government has overvalued the importance of Hinkley’s contribution to baseload and undervalued the importance of flexibility in a modern electricity system.

Despite the certainty implied by the headlines accompanying the Government’s decision to proceed, it still not certain that the project will go ahead. There remain significant doubts over the financing, including the current case in the European Court seeking to annul the State Aids clearance, the possibility of a further State Aids obstacle to the re-financing of EDF necessary for it to proceed and the financial implications of the wide range of investigations by the French nuclear regulator to which EDF is subject.

The Government should restructure the electricity market around the creation of an independent system operator with a duty to ensure a level playing field between supply and demand management options. This would guarantee that Britain makes the most productive use of its generating suite and thus captures most benefit for consumers.

 

 

Tom Burke CBE

Chairman

 

 

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‘Climate, Responsibility and Risk’ – REMARKS BY MR TOM BURKE CBE AT THE ESG INVESTMENT FORUM

 

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REMARKS BY MR TOM BURKE CBE AT THE ESG INVESTMENT FORUM, AMBA HOTEL, CHARING CROSS, OCTOBER 26TH 2016.

 

‘Climate, Responsibility and Risk’

 

Thank you for inviting me to speak to you this morning.

It is just over forty years since I came to work for Friends of the Earth in London. Then, as now, my main goal was to make the world go round differently.

It took me a while but eventually I did learn that money really does make the world go round. That set me a new challenge. I now had to find out what made the money go round.

There are few better places in the world to learn about what makes the money go round than the city of London. I had no difficulty at all in finding a large number of people eager to make sure that I really understood what they did to make the money go round.

What I learnt, in short, was that it is gossip that makes the money go round, albeit gossip of a particularly sophisticated kind. If I put that more politely, it is conversation that makes the money go round and very often it is the conversations that precede the mobilisation of the City’s vast analytic capacities that make the most difference.

So it is particular pleasure for me to be invited to join this conversation at such a crucial juncture. Changing the way the money goes round to meet the world’s need for affordable energy is perhaps the single most urgent aspect of our response to climate change.

The urgency of this task was underlined by the announcement earlier this week that concentration of carbon dioxide in the atmosphere passed the 400 parts per million mark in 2015. This is the level beyond which our chance of keeping the eventual rise in global temperatures below two degrees falls away from evens.

Few now doubt the magnitude, and the urgency, of the developing crisis in the climate. That the world is beginning to wake up was clearly shown by the Paris Agreement and the more recent agreement on HFCs in Rwanda. These were extraordinary examples of global cooperation at a time when confidence in multilateral policies elsewhere is falling.

Nor do many doubt the depth of the current problems with the global economy. The rise of trump, the Brexit vote, popular support for authoritarian regimes in places as far apart as Poland and the Philippines are all indicators of falling public confidence in the ability of governments everywhere to restore vitality to the global economy.

The prospect of a vicious spiral of decline is becoming visible. Climate change adds further stress to a struggling global economy. This undermines global cooperation and triggers a retreat into nationalism and protectionism which in turns slows, or even halts, efforts to tackle climate change. As the temperature rises stress on the global economy worsens.

You get the picture.

What I want to argue this morning is that it is not only possible, but an urgent imperative, to make the money go round differently so as to turn this vicious spiral into a virtuous circle.

To do this we have to build a bridge between the climate crisis and the economic crisis.

The Paris Agreement is one pillar of the bridge. In Paris nations agreed a goal to keep the global temperature rise manageable. They also agreed that the commitments they were ready to make would not achieve that goal. So they put in place a mechanism to regularly ratchet up their ambition.

But more significant than the formal text of the agreement is the political dynamic that took us to such a big success. At Paris the world turned two political corners on the path to a safe climate.

It is now clear to governments everywhere that the political risks of not acting on climate change are growing while the political risks of acting are falling.

This change is being driven by events. It is no longer new scientific knowledge that is driving governments to act. It is the events that climate science has forecast already starting to happen.

At the same time the political risk of acting is falling as the costs of low carbon technologies continues to fall dramatically. This means they are replacing fossil fuels at a far faster rate than has been forecast by the International Energy Agency and similar bodies.

What we are seeing is a change in the fundamental political equation as seen by governments. Until Paris the equation looked like a choice between today’s winners (dividend and revenue rich fossil fuel companies) and tomorrow’s losers (companies hit by a changing climate) plus tomorrow’s possible winners (the low carbon technologies).

For most politicians that’s a no brainer. Whatever gestures you might make publicly, in private you back today’s winners.

This equation is morphing into one in which governments face a different choice. Now it is between today’s winners (fossil fuel companies) and today’s losers (companies already being hit by a changing climate) plus today’s winners (renewables are now attracting the bulk of global investment in electricity generation).

This is a much more difficult choice for politicians to make without thinking it through. Voters everywhere prefer renewables to fossil fuels and worry increasingly about extreme weather.

Secondly, the broad public narrative is also beginning to morph. since we first began discussing climate change some forty years ago the dominant debate was over how best to constrain the economy so as to keep the climate safe. The focus was on measures to prevent the economy putting carbon into the atmosphere,

This led to a rather sterile debate which kept economists busy over whether the costs of dealing with climate change were bigger or smaller than the costs of not dealing with it. This framing posited the question as a false choice between the economy and the climate.

What we are seeing now is a public narrative increasingly about how best to take the opportunities of building a low carbon economy. Saying ‘yes’ to something is always more politically attractive than saying ‘no’. As the low carbon technologies move out of the laboratory and into the market so the nature of the climate policy debate is changing.

The focus is now increasingly on how to make the economy work better – be smarter, cheaper and cleaner – and pick up all those climate benefits on the way.

One of the most encouraging sights in the run up to Paris was that of central bankers getting involved in climate change for the first time. They had not previously been notable participants in the debate.

There have been few stronger signals to governments of just how serious a problem climate change is becoming than Bank of England Governor Mark Carney’s speech last September. In it he warned of what he called the tragedy of the horizon – something climate policy makers have long understood – the danger that by the time it had become obvious that something should be done about the climate it would be too late to do it.

In his recent Arthur Burns Memorial Lecture Carney returned to climate change. In doing so he erected the second pillar of the bridge we need to build between the climate crisis and the economic crisis.

In the speech he sets out three ways in which climate change represents a threat to financial stability. First, the physical risks of a changing climate could over time threaten the ability of the insurance market to provide the coverage necessary to sustain corporate investment.

Second, there are liability risks flowing from the desire of those suffering loss from climate change seeking compensation from those they hold responsible. Some companies are already facing legal actions over their failure to disclose climate risks of which they were aware,

Third, there are the so-called transition risks. These are the risks that policy changes, or technology changes, or the physical risks of a changing climate, could lead to, sometimes abrupt, changes in asset values.

I would add a fourth category of risk to financial stability that is indirect. These are second order effects. Climate change is a stress multiplier. It is already clear from Syria that it can play a key part in creating failed states. Clearly companies with investments in states with a high vulnerability to climate change and weak governance will need to price these risks well.

It would take several such failures simultaneously to precipitate financial instability globally. But we should not overlook the possibility that should such failures lead to regional conflict, in South Asia for example, then the impacts on financial stability could quickly become global.

Carney sets these risks in the context of a stuttering global economy that has failed to restore global growth. He then argues that a rebalancing of effort between monetary, fiscal and structural policies as essential to restoring growth to the economy.

In this context’, he says, ‘green finance is a major opportunity’. he goes on to contend in a crucial passage ‘by ensuring capital flows finance long term projects in countries where growth is most carbon intensive, financial stability can be promoted. By absorbing excess savings, equilibrium interest rates can be raised and macroeconomic stability enhanced. And by allocating capital to green technologies, the prospects for an environmentally sustainable recovery in global growth will increase.’

Or, put in human rather than central banker speech, Mark Carney believes that saving the climate can help save the economy.

Central bankers are not, for the most part, renowned for their starry eyed optimism. So if building a bridge between the climate crisis and the economic crisis is desirable, as Carney thinks, how is this to be done.

In E3G, we have been giving some thought to how the EU could help forge a strong alignment between the needs of the climate and the needs of the economy.

The Commission has already begun by doubling the financial capacity and duration of the European Fund for Strategic Investment. This will make at least €200 billion available for climate action. Also, its Capital Markets Union refresh will establish an expert group to develop a comprehensive strategy for sustainable finance.

It could go further by explicitly linking the CMU to the Energy Union by asking member states to develop national capital raising plans as part of their national energy and capital plans.

To further help crowd in private capital the Sustainable Finance Plan 2030 should ensure that all European financial public sector risk sharing tools are fully aligned with the EU’s climate targets.

Next, the Commission needs to take the lead in developing comprehensive and widely accepted industry standards for green bonds.

Furthermore, it is past the time when the Commission should have issued guidance to Member States on how they should re-interpret fiduciary responsibilities in relation to ESG risk in their national legal contexts.

In addition the Commission should develop legislative proposals to require asset owners to consult their beneficiaries on their preferences for the sustainability of their savings.

These steps would be complemented by the Commission developing a mandatory requirement for all asset owners to disclose information about their responsible investment policies and how those policies were being implemented.

These are just some of the steps that would help construct a robust solutions bridge between the world’s climate crisis and its economic crisis. We have set them out in more detail in a report we will publish on Friday 28th October. They are all ways to make the money go round differently. I have described how we could begin to do them in Europe but there is no reason why similar measures cannot be adopted everywhere.

When I began my career as an environmentalist my passion was to change the economy so as to protect endangered species and human health. There is a nice balance in finding myself now using my knowledge of the environment to help protect the economy.

 

 

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BBC World News – Carbon emissions rise to a new record

 

 

BBC: The biggest companies in the world have helped carbon emissions rise to a new record, according to the UN.

Tom Burke: If you are, for instance, the motor industry, you can change your technology and use electricity instead of petrol for your fuel.  But if you are the actual fossil fuel producers, really there isn’t anything else that you can do.

 

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HFC deal signed – Channel 4 News – 15 Oct 16

 

 

 

Tom Burke: What we are seeing (with HFCs) is exactly what happened with CFCs with the ozone hole, which is when the big countries got in and developed the alternatives, and began to develop them in large quantities, that drove the price down, and made it easier for the developing countries to join in. I think that we are going to see exactly the same thing happen again here.

 

 

 

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Will flood exercises better prepare us? – Sky News – 12 Sep 16

 

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Sky News: The Environment agency is beginning to prepare for the winter months ahead, they are training with new barriers, pumps, vehicles and drones to test their flood responses. Well, joining me now is the Chairman of Third Generation Environmentalism, Tom Burke […..] Will flood exercises better prepare us?

Tom Burke: Yes they will, and it’s important to be doing this, not the least because we know from the way that the climate is changing that there are going to be more extreme weather events. There are going to be more floods, and indeed as we go on, there is going to be sea level rise to cope with as well. So it is absolutely right for the Environment Agency to be preparing in the way that it is doing for these emergency events. But what is much more important than being ready for the emergencies, is to make sure that we are doing the right sort of planning, to cope with the fact that this problem is going to go on getting worse for some time.

Sky News: And what is the right sort of planning? What would that right sort of planning be?

Tom Burke: I think three things: First of all, when people have been flooded then there is a higher probability that they will be flooded again, so you need to make sure that their insurance cover will allow them not simply to replace what they had before, but to upgrade their own local flood defences. I think that the second thing that is really important is that when we drive forward with building the new homes that people need, we don’t put them on flood plains, making them more vulnerable to flooding. So you have got to make sure that your planning system is connected properly to your flood defence system. And then in the longer run we really do need to have much more strategic planning, and much more investment in how we protect all of our infrastructure from a changing climate and from the way that will manifest itself in people’s lives, very often as floods.

[…..]

Sky News: How important is it that there is an ultimate focus on the effects of climate change, both on a national stage but also on a global scale as well?

Tom Burke: Well I think that it is very important that we do everything that we can to slow down the rate that the climate is changing, and to stay below the agreed goal of limiting that change to two degrees, and that means that if Britain wants to make sure that other countries do their bit, we have to be doing our bit, and frankly at the moment there are real signs that the government isn’t doing enough to meet the target that we have set ourselves, and that weakens our ability to get other countries to do more, because no country can solve this problem on their own. And if we don’t do that, then we are trying to shoot at a moving target for the level of resilience that we are need to build to floods, and of course that ends up being not only a big interruption to people’s lives but a big waste of money as well.

Sky News: Off the back of the floods that we saw over the Christmas period last year, in cities like Manchester, Leeds and York, there were promises of more government investment, 2.5 billion pounds being invested by 2021. Is that going to be enough?

Tom Burke:  I doubt it. I think that the Bonfield Report, the report that came out fairly recently, was very careful in what it said, but it pretty clearly indicated that we are not investing enough now, to protect ourselves from the kinds of stresses that we are likely to see in the future.  It’s not only about money, as I said, it is also about planning. Don’t make the problem worse by putting buildings and things in the wrong place.

Sky News: On the point of planning, is it more important to focus on the current barriers and systems that are currently in place, or to think big and look at the huge projects in the future, in the coming months and years?

Tom Burke: Well you have got to take a long term view, and you mustn’t only think of civil engineering. The kinds of things that The Environment Agency is testing out today are fine for emergencies, but in the longer run you want to be thinking about how you use investment in natural capital. In the way, for instance, you use land upstream as catchment areas to divert water to, the way in which you use forests and woods as a way of slowing down the rate at which water flows off the hills, and then becomes a problem when it gets into urban areas. You want to make sure that you don’t straighten out all of your rivers, so that you keep the natural environment, and you make use of the natural infrastructure, to help you to manage the problem.  So there are lots of different things to do, so only focusing on the engineering and what you have got to spend, means that you will miss some of the more effective ways to address the problem.

Sky News:  On that point, the Deputy Chief Executive of The Environment Agency, just after the flooding that we saw over the Christmas period was calling for a radical new approach, and a real focus on new alternatives. Can you just give us a little bit more detail? I mean what would you be suggesting right now?

Tom Burke: Well, for instance, exactly what I have just said. I am sure that is what he had in mind. You want to be holding water upstream. What happens when you get these very dramatic events that do so much damage to people’s homes, and to our infrastructure, is that you get a very rapid flow of water off the high ground into the low ground. If you have tarmaced the low ground, and if you have straightened your rivers, then what you get is these massive flows of very fast water, which is very damaging. So you want to slow the water down, so you do that by keeping natural vegetation in the waterways, by not straightening them and canalising them, and by planting trees and vegetation upstream. That just holds the water so that it comes down more slowly. Where you have got some areas where you are going to have to have land that you can divert water to, very much as flood plains always have done, you can divert water on to those plains, so that it doesn’t flow so quickly into the cities and urban areas where it is so disruptive to life. Now, quite a lot of that is management. Will you need some cash to help you manage it? Yes. The danger with the wrong kinds of engineered things is that you just shift the problem around, you don’t actually really solve the problem. And you have got to consider that, not only because you have more moisture in the air as a result of climate change that you are going to get heavier rain, as we get to 2030 and beyond you are going to be seeing sea level rise, which means that you have got to think about managed retreat from parts of the coastal zone that are vulnerable to flooding, now not from rain coming down from the high ground, but from sea level rise and winter storm surges actually coming off the sea. So there are quite a lot of different thing to be done and those are the kinds of thing that the Deputy Chief Executive had in mind.

[…..]

Sky News:  How do you allay the fear of member of local communities who have seen flooding happen time and time again?

Tom Burke:  I think a really critical point is that you have to involve the communities in the planning for how you are going to deal with floods. It can’t just be done for them; it has really to be done with them, so that people understand. Firstly, so that they see the things that are being done that aren’t always obviously visible. Secondly, they get some real learning about how this is going to happen. You can’t do this by ignoring the communities, and that means local government has to play an increasing role in this, particularly in the cities.

[…..]

Sky News: Thanks very much for joining us.

 

 

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Hinkley will leave Britain behind the curve on energy policy

 

This blog first appeared in Business Green

 

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Hinkley is a 20th Century solution to a 21st Century problem. Bigger is no longer better. There are faster, cheaper, cleaner and smarter ways to deliver affordable, secure, low carbon electricity to Britain’s businesses and consumers.

Nothing about this deal is good for Britain’s hardworking families. They will pay the bill for decades but most of the jobs will go abroad. It is a bad deal for consumers, for the climate and bad for the country.

The Prime Minister has missed a real opportunity to set Britain on course to a more productive and secure future. Instead she has committed us to an expensive and anachronistic energy policy that will leave Britain behind in a rapidly changing world.

Digitisation is increasingly making it possible for people to be both consumers and producers. It does this by allowing them to connect directly to each other. Through Uber and AirBnB this has begun an accelerating revolution in the taxi and hotel businesses. This is happening in energy too.

The falling costs of renewables and batteries and our growing capacity to manage big data are now making a similar rapid transition in the way we generate electricity. Large centralised power stations of any kind are a barrier to this transition. This is particularly so when they are as big, 3.2GW, as Hinkley.

May’s decision to go ahead with Hinkley will slow down, and increase the cost of, making this transition in Britain. It will mean we will fall behind the rest of the developed world in building a flexible electricity system fit for purpose in the 21st Century.

But this is not the only problem with Hinkley. The Investor Agreement that Greg Clark will sign with EDF is an irrevocable index-linked ‘take or pay’ contract to purchase 35 years’ worth of electricity from EDF at more than twice the current wholesale price.

This will cost British consumers £37 billion in subsidy, four times that originally forecast.1 It means Britain’s electricity consumers will pay more than £1 billion/year in subsidy to EDF for 35 years. It will prevent Britain’s consumers buying cheaper electricity if it would displace that from EDF. Furthermore, this deal binds future governments.

It is a treasured feature of British constitutional and democratic practise that one Government cannot bind its successors. This raises important constitutional as well as economic and energy policy questions.

Despite these profound implications the business case for the deal with EDF has never been subject to informed public scrutiny. Indeed, the Government has consistently refused to publish the analytic documents underpinning it.

The National Audit Office has already raised doubts that Hinkley represents value for money in the light of developments, including significant reductions in electricity demand forecasts, since it was first proposed.2 The National Infrastructure Commission has identified a package of other measures that could provide affordable, secure, low carbon electricity at lower cost. More recently, the National Grid has cut its forecast of the need for new centralised generation capacity in Britain by more than 50%.

The truth is that Hinkley is a ponderous white elephant at a time when the pace of change in technology is accelerating and putting a bigger premium for electricity systems on flexibility rather than size. No-one has ever suggested Hinkley will be flexible. Fortunately, Hinkley still has to overcome a number of obstacles before the elephant escapes.

The State Aids clearance for the UK subsidy is under challenge by the Austrian Government and others in the European Court. We are still waiting for the court to decide but if it annuls the European Commission’s decision then the current deal will fail and the UK will have to think again about how to pay for Hinkley.

EDF is already in such financial difficulties that it is being bailed out by the French Government in order to be able to afford Hinkley. Greenpeace has obtained a robust legal opinion that any such bail out will trigger a State Aids inquiry by the Commission. This will take time and even if the Commission does grant approval there is a high probability of its decision also being challenged in the European Court.

Even in the most optimistic scenario, Hinkley is unlikely to produce electricity until 2030. There are cheaper, faster, cleaner and more reliable options available to deliver affordable, secure, low cost electricity to British consumers.

These options include:

–      energy efficiency has reduced electricity demand by 25TWh ( 7% – the same as Hinkley will produce ) since 2010. A McKinsey report for the Government estimates that by 2030 demand could be reduced by a further 23% while reducing consumers bills;

–      the National Infrastructure Commission reports that additional interconnectors could supply 2-3 Hinkleys by 2025;

–      another National Infrastructure Commission report proposed investment in storage and smart grids that would provide the equivalent of 4 Hinkleys by 2030 and save £8 billion;

–      Dong Energy, the world’s largest wind energy company, could replace all Hinkley’s electricity sooner and at lower cost. Offshore wind costs are continuing to fall;

–      electricity from solar power is now also cheaper than Hinkley, having fallen by half in the last five years. From almost no solar panels in the UK, a third of a Hinkley has been added since 2010. Half of that was delivered in just 18 months.

So what about when the sun doesn’t shine and the wind doesn’t blow? As the former CEO of National Grid pointed out two years ago, ‘baseload’ is an outmoded concept. The fact is that no generator runs all the time, not even nuclear. Changes in renewable availability are highly predictable. This allows smarter management of the grid to cope with their variability.

Nuclear reactors fail, or in industry terminology suffer an ‘unplanned shutdown’, regularly. About a quarter of Britain’s nuclear fleet have unplanned shutdowns each year. Unlike the weather which we can predict days or weeks in advance a Hinkley outage is not predictable which means you have to be able to switch on 3.2 GW of spare power instantly. Because they come in big, unpredictable lumps, they are more of a problem than renewables variability. In any case, as the fast falling costs of batteries follows down those of wind and solar, the intermittency of renewables becomes even less of a problem.

The decentralised energy system that is the alternative to Hinkley has one other advantage. With Hinkley electricity bill payers will receive an ever bigger bill through their letter box. In the renewable energy future that is better for Britain they will not only get a smaller bill, they’ll also receive a cheque.

 

Tom Burke

London

September 22nd 2016

 

Tom Burke is the Chairman of E3G

 

Footnotes

1.   This is also twice the largest figure presented to Parliament in the Departmental Minute of October 2015 that sought authorisation to take on the liabilities of the Agreement. This raises the question of whether the Government has the authority to sign the Agreement at this time.

2.   The NAO will produce a report on the deal ‘once EDF has taken its final investment decision to build HPC’ NAO July 13th 2016. Unfortunately, this report will be after the Investment Agreement has been signed and so can have no impact on the deal itself.

 

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Hinkley is a very expensive strategic mistake for the country – TRT World News

 

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TRT News: Joining me now from London is Tom Burke, Chairman of the environmental think tank E3G , and a former government advisor on climate change.

Hinkley Point, what’s your biggest problem with it?

Tom Burke: It’s a very expensive strategic mistake for the country. It’s going to produce electricity at more than twice the current wholesale price for 35 years. It’s going to cost 37 billion pounds in subsidies from the British consumer, and all of that for an untried reactor, no example of which is working anywhere in the world.  So it’s a very bad deal, there are cheaper, faster, cleaner, and more reliable ways to meet a low-carbon, affordable and secured electricity supply for the future. So what you are really seeing is a 20th Century solution to 21st Century problems.

TRT News:  Just to be clear, Tom, you are emphasising cost over security? How big are your security concerns?

 Tom Burke:  I am not very worried about the prospect of taking Chinese money, and the way that you fit nuclear power stations into your grid, doesn’t give them access to the kind of software that would expose you to security worries about crashing you grid. I think that the government is right to have taken a golden share, in order to prevent the reactors from being sold on, but the security worries aren’t really the biggest worries. There are of course other worries about what happens to the radioactive waste at the end of its life, and there is no available solution to that problem yet in the United Kingdom, or indeed anywhere else in the world.

TRT News:  Is the price you have to pay 24 billion dollars to have warmer relations with the Chinese?

Tom Burke:  I certainly agree that, that looks like it was a major factor in the decision. In a sense it was a white elephant that got so big that nobody could shoot it. That doesn’t make it anything like a good deal. It’s just, you’re basically selling out you energy policy for some marginal gains in the headlines. The really strategic problem is that is begins to point Britain in the wrong direction in term of the future architecture of it electricity system. We are moving into a world in which digitisation makes available all kinds of strategic and structural change in industry, that’s true of the electricity industry as well. What it means for Britain’s electricity consumers is all that they will continue getting through their letter box for the next 35 years will be big bills, and actually the world that we are moving into in for  electricity systems is one in which consumers won’t only be getting bills through their letterboxes, they will be getting revenue cheques as well.

TRT News:  Tom, post-Fukushima there was a taboo connected to nuclear energy, might a deal like this begin the process of reversing that taboo?  Reversing the questions that people have been asking about whether nuclear energy is the way to go?

Tom Burke:  I don’t think so. I suspect Hinkley will be a one off. Rather like Sizewell was in a previous government when there were big nuclear ambitions. Ten nuclear power stations were promised, but only one was actually built. I think that the economics are a real killer for nuclear. If you are worried about safety, what you should be more concerned about is the Chinese government proposing to build sixty nuclear power stations in the next few years. The idea that you can maintain the necessary level of safety and quality of build in order for those programs to be successful, I think that is a very, very big question mark.

TRT News:  Tom, 25,000 jobs will be created between now a 2025, aren’t you at least a little bit excited about that?

Tom Burke:  I’m not at all excited about it, I’m much more concerned about the 14,000 jobs in energy efficiency that the British government destroyed by an arbitrary change in its policy, and the 12,000 jobs in the solar industry that were also destroyed by an arbitrary change in policy. We could have got more than that number of British jobs, that would be long-life jobs, if we had continued with those policies and we simply wouldn’t have needed Hinkley at all for our secure supplies of affordable electricity. The thing to remember is that the cost of renewable, and the cost of batteries that allow you to deal with their variability, those cost are going down consistently.  Nobody has ever built a program of nuclear power stations where the cost didn’t go up over time.

TRT News:  Ok, good points. Unfortunately, we are out of time. It’s been great to talk to you. Thank you so much.

Posted in Business, Changing the Politics, Climate Change, Domestic, Economics, Economics, Energy, Energy Efficiency, Energy Security, Environment, Hinkley, In the media, International, Interviews, Nuclear, People, Politics, renewables, Security, Sustainability, The Human Cost, TRT World News | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment