Diamond in the rough: why Scotland has a key role to play in the UK's clean growth

Carbon capture and storage (CCS) has a troubled history with the Conservative Party. Two failed competitions, two National Audit Office inquiries, and millions of pounds spent without a single operational large-scale project to show for it is hardly an endearing track record for any new Minister to inherit. But with the publication of the Clean Growth Strategy, Ministers across government have signalled renewed, albeit cautious, enthusiasm for CCS as part of new plans to decarbonise and grow the UK economy.

“It is very much a personal commitment and something I strongly believe is exceptionally important”, Claire Perry MP, Minister for Climate Change and Industry, told a Westminster Hall debate back in October 2017. “We want the prize of global leadership in this area: we want to be the people who break the deadlock, deploy CCS in the UK and capture the export opportunities”. Strong statements, considering the rocky history.

Newfound enthusiasm for CCS in the Conservative Party however doesn’t come without its caveats. “Costs must come down” has been the go-to line for Energy Ministers since the ill-fated CCS commercialisation programme was brought to an abrupt conclusion in November 2015. But as Offshore Wind Week has so aptly demonstrated, cost reduction for low-carbon technologies is as much within the gift of governments as it is of the private sector and research communities.

Consider how relative policy certainty and clear commitments to offshore wind, for example, have made the UK a global leader in the field; and then contrast that to the indecision and sporadic flip-flopping that has characterised political appetite for CCS in the UK. That’s the scale of the challenge facing Claire Perry, and overcoming it will require much more than £100 million worth of research and development and a CCUS (carbon capture, utilisation and storage) pilot.

The UK isn’t the only country grappling with the ‘how to do CCS’ question though. At the vanguard of international efforts on CCS is the International Energy Agency (IEA), who recently hosted a high-level roundtable with Ministers and CEOs from some of the world’s largest energy companies. The IEA’s Executive Director, Fatih Birol, described it as the “highest level of industry and government engagement that we have seen on CCUS”. (Unfortunately, the UK chose not to send a Minister.)

New IEA analysis published that day shows that global capital investment in large-scale CCUS projects has now surpassed $10 billion. A huge amount of money no doubt; but not when compared against investments in other low-carbon technologies, which came close to $850 billion during the last year alone.

“Without CCS, the challenge [of meeting global climate goals] will be infinitely greater”, said a joint statement from Birol and US Energy Secretary, Rick Perry, adding, “we know this is essentially a policy question”. Part of the problem with CCS policy (and politics) though is that perceptions of costs continue to dominate the discourse, often before any discussion around the benefits has even begun.

Robust policy development requires a proper understanding of the costs and benefits of different investments and different technological pathways. In the UK to date though, CCS policy has been based predominantly around cost and risk management. In its review of the second CCS Competition, the National Audit Office found that the responsible department (the Department for Energy and Climate Change, at the time) hadn’t even fully assessed the benefits of the programme.

That’s why a new study from Summit Power, a US project developer with a portfolio including both traditional and alternative forms of electricity generation, has started to turn heads.

In the aftermath of the November 2015 cancellation of the CCS commercialisation programme, Summit quietly began developing options for a new gas CCS project at the Grangemouth industrial site in Scotland. With an anchor power project helping to de-risk investments in CO2 transport and storage infrastructure, industrial emitters in the region would be able to access an affordable solution for reducing their CO2 emissions.

Working with a range of academics, consultants and other CCS organisations (including the Teesside Massive, sorry, Collective), Summit has turned the typical CCS cost debate on its head. Instead of focussing only on what CCS might cost, its first-of-a-kind analysis has also shown the economic benefits that it might bring.

Based on Committee on Climate Change (CCC) analysis and guidance from the HM Treasury Green Book, Summit found that CCS could deliver £169 billion in benefits to the UK economy between now and 2060, compared to total costs of £34 billion.

A significant portion of the benefits identified derive from avoiding CO2 emissions, but by working with the University of Strathclyde to assess ‘linked economies’, the analysis found that the project could deliver £5 billion worth of health/wellbeing benefits and a colossal £54 billion increase in domestic economic activity. Between now and 2060, the analysis estimated that more than 225,000 jobs could be created or retained as a result of investing in CCS.  

Aside from costs, the other main hurdle that CCS has struggled to overcome in the UK is the scale of commitment required. Summit’s approach, again, tackles this challenge head-on and illustrates how a UK CCS programme could be structured so that each individual phase would make sense in its own right.

Far from requiring government to commit to an endless roll-out of projects in order to justify initial investments in infrastructure, Summit’s analysis shows that a decision to invest in just two initial phases of CCS between now and 2025 could provide £8.1 billion in economic benefits to the UK in return for a total investment of £3.8 billion. What’s more, that initial investment then provides optionality for the future: invest further if more CCS is needed; don’t bother if it’s not. Nothing lost.

The coming weeks will see the first meeting of the new CCS Cost Challenge Task Force and the Ministerial CCUS Council. It’s not yet clear what impact Summit’s analysis will have on the direction of future CCS policy, but one would at least hope that it helps shift a conversation dominated by costs to one that also recognises the substantial benefit that CCS could bring to the UK. As David Cameron once said:

"This isn't a distant dream. CCS is truly within our grasp. And we in Britain have got what it takes to make that a reality. We've got an army of experts who have worked for decades in the energy sector. We've got a manufacturing and energy industry that wants to invest and get things going. What's more, we've got the depleted oil and gas fields in the North Sea in which to store the carbon.”

Theo Mitchell is Director of Enerfair Engagement, a policy and communications consultancy dedicated to industrial decarbonisation and the energy transition. Previously, he was Head of Office and Energy Policy advisor to Lord Ian Duncan in the European Parliament and Policy Manager at the Carbon Capture and Storage Association

The views expressed in the article are those of the author, not necessarily those of Bright Blue

Reflections on Bright Blue's Green conservatism conference

On Wednesday 1st November, Bright Blue hosted its inaugural Green conservatism conference – a day-long event of panel discussions and keynote speeches, all feeding in to some of the most pressing debates currently taking place in the environmental sphere. Specifically, we endeavoured to examine four distinct areas of interest: agriculture, conservation, the role of markets in energy, and energy security.

The day began with a keynote speech from the Minister of State for Climate Change and Industry, Claire Perry MP. She struck an optimistic tone about the economic and industrial opportunities the UK has going forward as a cleaner and more environmentally sustainable nation – citing the Government’s work in pioneering the Contracts for Difference reverse auctions which have led to a blossoming, and ever cheaper low-carbon power sector, and unprecedented investment in renewables like solar and wind since 2010. Perhaps most interestingly of all, the Minister acknowledged that current policy does not allow onshore wind projects to bid for low-carbon contracts, and that this inconsistency is something the Government is actively seeking to address.

Agriculture and CAP reform

The first panel of the day sought to explore the current and future status of agriculture in Britain, particularly in the context of Brexit. A vigorous debate ensued, with the panel divided as to what the future status of rural payments to landowners and farmers ought to be in the coming years.

Arguments were advanced both for and against maintaining large-scale state support for the agricultural sector. Those backing a continuation of payments made their case for doing so largely on the basis of food security and food standards, as well as to remunerate farmers for the various aspects of environmental stewardship they provide.

On the other side of the argument, however, the contradictory nature of CAP payments vis-à-vis environmental sustainability was advanced, along with the economic inefficiency which some believe they have encouraged in Britain’s agricultural sector. Regarding the stewardship role of farmers, it was argued that this could still be retained, albeit through a more targeted system of commissioning public ecosystem services where they are demanded.

The future of conservation

There was consensus on our second panel about the need to be doing a good deal more conserving. Each panellist, however, contributed a unique perspective on just what, exactly, the focus of conservation ought to be. Suggestions ranged from raw materials to soil quality, and ancient woodland to native species of flora and fauna.

One point of contention among the speakers was over the use of targets within conservation policy. Arguing against targets, some vocalised how they can give conservation efforts ever narrower focuses, whereas it can be more effective to examine issues of this kind holistically. The risk that a plurality of targets can quickly become contradictory of each other was also raised.

Nonetheless, other panellists defended this approach, largely on the basis that targets can serve as a spur to much needed action – for example, as we have seen with the phase out of petrol and diesel cars, or recycling rates. Furthermore, it was argued that targets may also usher in better data collection which can be crucial to understanding what elements of conservation policy are going right, or, importantly, wrong.

The panel also touched upon question of rewilding. Again, all broadly agreed that a degree of rewilding could be agreeable, yet there was debate around how far it should go. Some favoured the reintroduction of species like the lynx and beaver, but others drew the line at restoring native habitats, such as rewetting peatlands and reforesting upland woodlands which have been lost to agriculture, for instance.

Strengthening the role of markets in energy

Among the third panel of the day (and the first on energy), there was a general recognition that markets can and should be strengthened to deliver better outcomes for consumers. Different panellists highlighted the role that different technologies could play in revolutionising how we consume energy, such as big data, blockchain, connectivity, interconnection, and also demand flexibility services. As these cost-effective technologies develop and expand in the market, there will be greater scope for reducing government intervention.

Whilst there was broad praise for the Contracts for Difference reverse auctions which the Government has been conducting to drive down the costs of low-carbon power subsidies, the panel was split on the efficacy of large-scale nuclear projects like Hinkley Point C backed by now seemingly exorbitant strike prices. Some saw them as a necessary price to pay to ensure a secure supply of low-carbon energy, others as overly expensive and incompatible with a more decentralised, flexible electricity grid.

Energy security in the UK and Europe

Much in the same way as some members of the first panel on agriculture questioned the need for food security, so too was there scepticism on our fourth panel about the idea that the UK should be worried about energy security. Indeed, the panellists drew an important, under-appreciated distinction between self-sufficiency, which means that all energy is produced and generated domestically, and security, which means that energy supplies are secure through having diverse and reliable sources.

The panel was quite clear that we should not overstate the importance of Russian energy imports in the context of UK and European energy security, citing the maxim that “Russia needs Europe more than Europe needs Russia”. There was also significant optimism that improvements in renewables like wind energy will make domestic production easier, while new technologies such as electric vehicles and advancements in batteries will also help to bolster our storage capacity.

If there was one outstanding note of caution raised by the panel, it was that as our energy networks become increasingly interconnected and convergent, the potential danger of a successful cyber-attack on the system escalates. This, more so than conventional energy security fears, seemed to be where the panel thought resilience in our energy sector would be most needed.

Conclusion

The final two speeches were delivered by two former Environment Secretaries from the Major Government. While divided on the question of the UK’s membership of the EU, they are united on the imperative of protecting our environment.

First, the Rt Hon Lord Deben, Chair of the Committee on Climate Change, spoke of how business needs to assume a greater responsibility for tackling climate change, especially now that the science so clearly supports anthropogenic climate change. He stressed the idea of doing more to internalise hitherto externalised costs of pollution associated with consumption – in basic accordance with the ‘polluter pays’ principle. Furthermore, he highlighted how much more energy efficient everyday living has become as a result of EU regulations.

Second was the former Leader of the Conservative Party, the Rt Hon Lord Howard. Speaking with reference to his role as Secretary of State for the Environment during the Rio Summit of 1992, Lord Howard raised how, contrary to popular assumption, rising living standards and decarbonisation need not be antithetical – citing evidence that the UK has witnessed both the greatest decline in carbon emissions and greatest rise in per capita economic growth of all G7 countries over the past 25 years. He argued that Brexit would allow the UK to become even more environmentally friendly than it currently is.

In summary, the Green conservatism conference successfully brought together a range of policymakers, experts, and practitioners, particularly on the centre-right, with the shared ambition to realise a greener, more sustainable world, yet with different perspectives on how to achieve that desire. The debates which took place were testimony to the long-standing, but underacknowledged conservative commitment to environmental stewardship and conservation.    

Eamonn Ives is a Researcher at Bright Blue

Pedal power: why cycling should be at the centre of Government thinking

The Government is being taken to court yet again over its air quality plans. Environmental lawyers Client Earth have previously defeated both of the Government’s previous attempts at an air quality strategy. This third version has been reduced in scope to an ‘Air quality plan for nitrogen dioxide’, pending a fuller air quality strategy next year. Yet it too has been roundly criticised by transport planners, health professionals, environmentalists, and local authorities alike.

Everyone now agrees that previous governments’ support for diesel vehicles was a terrible mistake. We traded off marginal reductions in greenhouse gas emissions against increases in lethal pollutants. But action on pollution also needs to be linked to other issues too. A 2009 Cabinet Office report, on the costs of transport in English urban areas, found that the economic costs of air quality, congestion, road casualties and physical inactivity were all of a similar magnitude: around £10 billion annually.

Based on this evidence, surely it makes sense to invest in policies that tackle all of these costs by addressing their common cause: too much motor traffic. Transport planners since the 1960s have acted as if congestion was their number one challenge, with the other issues being secondary. Now we risk taking a similarly myopic view of air pollution, missing the bigger picture. Demonising diesels is now commonplace, with electric vehicles being seen as an environmental saviour. They are undoubtedly beneficial both for air quality and the climate – yet relying purely on electric vehicles would still leave us with congested and dangerous streets.

Investing in cycling and walking is, by contrast, a hugely cost-effective solution to all of these problems. Enabling people of all ages and abilities – young and old alike – to get around safely on foot or by bike would not only civilise our streets but would also halt the rise of obesity, type-two diabetes and other inactivity-related conditions, with all their human and economic costs.

But don’t cycle facilities cause congestion and pollution? After all, that’s what the papers keep saying!

Well, that might be true if you put your blinkers on and look only at the immediate impacts on motor vehicle journey times specifically along a street where new protected cycle lanes have just been built. But the opposite is true if you look at the wider road network, and consider the efficient movement of people (rather than motor vehicles), particularly in the longer term. A typical lane of a typical road can carry 2,000 cars per hour, or 14,000 bicycles. Reallocating motor vehicle space as space for cycling enables a lot more people to get from A to B efficiently, and reduces the amount of congestion and pollution they create throughout the rest of their journey. This benefit can be expected to easily outweigh the additional congestion faced by those who continue driving along the road which now has less motor vehicle capacity. London’s cycle superhighways are already carrying a lot more people than they could possibly have done under their previous configuration.

Moreover, this benefit is set to grow. People and businesses will continue adapting to changes in travel times, switching to the most efficient means of getting around. But the really big benefits come from creating an increasingly comprehensive cycle network. So far we only have a few disconnected lanes here and there. It will increase massively as our towns and cities start developing comprehensive cycle networks – as is the norm in countries like Denmark and the Netherlands.

So, what does the Government need to do to maximise the air quality and other benefits of cycling?

For one, it should require local authorities to draw up a Local Cycling and Walking Infrastructure Plan (LCWIP) as part of every Clean Air Zone. The Government’s recommended approach to planning comprehensive walking and cycling networks is a huge leap forward from our current tendency to provide disconnected cycle facilities where there happens to be a bit of spare space and a bit of spare cash. Yet at present, English local authorities are under no obligation to follow this guidance (unlike their Welsh counterparts), nor is there any financial support or incentives for those who do so. Changing this has to be part of the Government’s wider air pollution strategy.

It also needs to shift the balance of funding from inter-urban road schemes to healthy, efficient and sustainable local transport solutions. The conventional argument for road-building is that it supposedly benefits the economy. Yet this claim has been repeatedly questioned by leading transport academics. And it ignores the adverse economic impacts of a car-dominated transport system on the economies of our urban areas – as quantified in the Cabinet Office report mentioned earlier. Local authorities, combined authorities and ‘metro-mayors’ of all political persuasions are eager to invest in high-quality walking and cycling provision, recognising how this could improve the health of their streets, their residents and the local economy. A shift in funding would enable them to do so, yielding huge benefits.

Alongside this, the Government should coordinate a national framework for urban road user charging schemes, to cover both congestion and pollution impacts. The main reason why the Government keeps losing legal battles over air quality is because of its reluctance to support road user charging, despite having identified it as the most effective measure for tackling air pollution in the “shortest possible time” (as required by law). Instead, the Government has left councils not only to make the political justification for road user charging, but also to work out the charging processes and technologies. It claims that air pollution is a local problem. Yet surely a problem in over 200 locations needs to be seen as a national problem! In the name of efficiency, it needs to provide a national lead on tackling air pollution and congestion. There are huge economic, environmental, health and quality of life benefits to be gained from doing so.

The third is to back this up with financial incentives not only for people to trade in old diesel cars, but also for motor vehicle manufacturers to stop selling them. A scrappage scheme could be funded by a short-term increase in vehicle excise duty for the dirtiest motor vehicles.

Over time though, the financial signals need to shift towards reducing the use (rather than merely the ownership) of motor vehicles – starting in the most congested and polluted areas, but progressively tackling their energy and climate impacts too. Simply electrifying the vehicle fleet, without reducing our use of motor vehicles, would increase our energy demand, which would need to be met from renewables if reductions in greenhouse gas emissions are to be maximised. It could also massively reduce Treasury revenues – by between £9 billion and £23 billion, according to one estimate. There has to be a clear and transparent link between charging that deters the use of dirty and inefficient transport, and investment in efficient, healthy and clean alternatives such as walking and cycling.

Roger Geffen is the Policy Director at Cycling UK

The views expressed in this article are those of the author and are not necessarily shared by Bright Blue

Gove not bottling it over plastic pollution

The Environment Secretary, the Rt Hon Michael Gove MP, may have opened his speech at the recent Conservative Party Conference with a characteristically light-hearted joke about recycling, but the main thrust of the speech was an examination of some of the most serious environmental problems with which Britain is currently faced. One of the key messages which stood out was a clear commitment to reducing the nation’s plastic pollution, with Gove announcing a call for evidence for a new bottle deposit scheme in England.

Other government policies to tackle plastic

The Government has already made good headway on tackling the vast quantities of plastic which end up strewn across the country, and circulating in our surrounding seas. In October 2015, English supermarket shoppers saw the introduction of the plastic bag charge, which has resulted in a drop in their use of over 9 billion units – equivalent to an 83% fall.

Earlier this year Gove followed up an announcement made by his predecessor, the Rt Hon Andrea Leadsom MP, by publishing draft legislation which seeks to ban synthetic microbeads in cosmetic and personal care products. And in April, an England-wide ‘Litter strategy’ was created, part of which focuses on how to better ensure plastics are appropriately disposed of – through measures such as better recycling education in schools, and appraising how changes to bin collections may alter recycling rates.

The bottle deposit scheme

The emphasis on plastic bottles is not without good reason. Indeed, figures suggest that one third of all plastic deposited into our seas is beverage litter. For comparison, plastic bags and microbeads each constitute only one percent of total plastic marine debris. What’s more is that solving plastic bottle pollution also appears far more achievable relative to other pressing environmental issues.

A bottle deposit scheme works by incentivising people to recycle used bottles, rather than simply throwing them away once they are empty. A small levy – perhaps 10 to 30 pence – is charged on each bottle purchased, which is then refunded upon return of that bottle. The bottles are then crushed and sent off to be turned into brand new plastic products.

While England actually has rather robust recycling infrastructure within the household domain, the gap in facilities tends to occur outside of the home. Coupled with an ‘on the go’ culture – particularly with regards to food and drink – some individuals find it challenging to appropriately dispose of litter. Indeed, learning how to address this fact forms one line of enquiry of the consultation which the Government recently opened out to the public.

Internationally, only a handful of countries have bottle deposit schemes, but those which do tend to enjoy elevated levels of recycling. In Germany, for example, their polyethylene terephthalate bottle deposit scheme boasts a 98.5% recycling rate – which dwarfs the UK’s current performance, where only 57% of plastic bottles are eventually recycled. Over the border in Scotland, the First Minister, the Rt Hon Nicola Sturgeon MSP, recently confirmed to the Scottish Parliament her intention to do more to support recycling and the circular economy, in part through the introduction of a bottle deposit scheme.

The environmental impact

The consequences of plastic pollution can be devastating for the natural environment. For wildlife, there is the clear danger that they will ingest plastic believing it to be food, as well as becoming entangled within it. Globally, over a million seabirds and 100,000 marine mammals – such as dolphins, whales and seals – die from plastic pollution each year. Indeed, speaking at the recent Our Oceans Conference, Prince Charles spoke of his “mounting despair” with respect to plastic pollution and the impact which it is having on marine environments.

But for humans, too, plastic in our seas can also pose health risks. Of particular danger for human populations are microplastics, which can find their way into our oceans through accidental spills of ‘nurdles’ (the raw plastic pellets which are shipped around the world for manufacture), microbeads, and as the result of the breakdown of macroplastics – e.g. bags and bottles. Where plastic is most hazardous to humans is when it enters into the food chain. One study, for instance, found that the average European who eats seafood will ingest over 11,000 pieces of microplastic a year.

Recycling plastic bottles not only helps the environment through reducing pollution, but also in the way that doing so saves on energy and resources in production, as well as conserving landfill space. It takes 75% less energy to make a bottle from recycled plastic rather than ‘virgin’ material, for instance, and diverting a tonne of plastic away from landfill can save 7.4 cubic yards of space. Reuse of plastic helps create a more resource-efficient economy too, with significant potential cost savings for business.

Other positive consequences of bottle deposit schemes which have been touted include the potential for diminished costs for councils – as there will be less litter and household recycling to collect – and an improved, tidier, more beautiful public realm. In purely fiscal terms, one report calculates that savings to local authorities in England alone could be anywhere between £35 million to £56 million per annum.

Conclusion

At a time when the focus of the political world is fixed largely on the issues of Brexit, under Gove’s leadership Defra has been quietly and consistently churning out practical policies which in time will lead to demonstrable improvements in our nation’s natural environment. The precise configuration of a bottle deposit scheme will undoubtedly be vital to whether it succeeds at tackling plastic pollution. However, the evidence from other countries suggests it could certainly be a step in the right direction to a less polluted world.

Eamonn Ives is a Researcher at Bright Blue

Putting the environmental sector at the heart of the Government’s industrial strategy

One of the driving ideas at the heart of Theresa May’s vision for Britain is the rebirth of a term that since the 1970s has been rarely uttered by those in government – industrial strategy. Backed by the creation of a new department, the Department for Business, Energy and Industrial Strategy, and championed by its Secretary of State, the Rt Hon Greg Clark MP, the foundations were laid out in the ‘Building our Industrial Strategy’ Green Paper published at the beginning of this year. The Green Paper mandates the need to “build on our strengths and extend excellence into the future”. As the leading trade association for environmental technology and services, at the Environmental Industries Commission we contend that the UK’s environmental sector is a strength to be built upon, and therefore should be central to the industrial strategy.

The environmental sector is one of the UK’s fastest growing. In the decade since EIC was formed in 1995 the value of the sector has grown tenfold – from £13 billion to £124 billion in 2015. Between 2010 and 2014 it grew by 11% compared to the 7% growth seen by the economy as a whole. It provides 373,000 largely skilled jobs, and contributes 1.6% to GDP with £29 billion of value added to the economy – more than pharmaceuticals or aerospace. The growth of the sector is all but guaranteed, as it is largely driven by Government initiative, and there is now a consensus across the main parties that climate change and the health of the environment in general are essential issues. For instance, the current commitment to combat poor air quality across the country will spur the growth of the air quality management sector, while the necessity to build new housing on brownfield land boosts the contaminated land remediation sector. 

The global market also poses a great opportunity for UK environmental business. The expanding middle-classes of emerging powers such as India and China necessitate governments to clean up their environments. The UK has both the expertise and innovative technology solutions required to meet some of that demand, but at the moment we aren’t doing enough to promote ourselves. UK environmental exports currently total 0.6% of the $1 trillion global market and even without increasing our share we predict 26,640 new jobs will be created by 2025. Increase that share by 50% and 40,000 new jobs will follow.

Despite the existence of world-class research and expertise in this country, there is still much room for improvement, and in relative terms the UK lags behind nations such as Finland, Denmark and Ireland. These nations have burgeoned the growth of their environmental sectors through government backing for research and development, and support for early-stage green investments to help pioneering technology reach the market. In Denmark’s case, 3% of GDP is invested in research and development, while $657 per capita is allocated for early-stage green investments (as in Ireland), compared to the UK’s $163.  In Finland, a 2012 strategy made ‘cleantech’ one of the four focal points of Finland’s economy. This included the setting up of a Cleantech Finland board, headed by their Prime Minister and including ministers, business leaders and key civil servants. Finland also prioritises the promotion of its green technology in all its international influencing activities.

We represent many small environmental technology firms that have come up with ingenious ways to deal with a plethora of environmental challenges. As amazing as this technology is, it often doesn’t get the market exposure it deserves. We are doing our part to promote our members’ work in Government and beyond, but the green industry also needs the firm backing of Government, whether that’s through early stage investment through bodies such as Innovate UK, favourable economic policy instruments that support the growth of green business, or by better promoting the sector for export.

By setting out an environmental industrial strategy, the Government can fight on two fronts – supporting the green industry is both economically sound and would help the UK, and by extension the world, to be more effective at tackling its environmental problems and building a sustainable future.
Sam Ralph is the Policy Executive at the Environmental Industries Commission, the trade association of the environmental services and technologies sector

The views expressed in this article are those of the author and are not necessarily shared by Bright Blue

One step forwards, two steps back? The strange case of Tory solar policy

The Conservative Party has had an on-off love affair with the solar industry ever since the heady days of David Cameron’s Quality of Life Commission. Professionally, I was happy to serve on the Commission. It helped to create the right political conditions for the launch of the feed-in tariff in 2010 and cemented Conservative support for it – something that had seemed impossible when we started debating the policy. In the intervening period, there have been a series of policy highs and lows. Too often it’s been a case of one step forwards, two steps back.

Right now, the real danger is that solar will be overlooked in the forthcoming Clean Growth Plan. There appears to be a mood afoot in Government that the job is done, that a so-called (actually non-existent) solar ‘target’ of 12 gigawatts by 2020 has already been met, and that there is little industrial value in UK solar. News this week that one solar farm has been developed ’subsidy-free’ for the first time in the UK has also led inevitably to a rather complacent response from Ministers. Yes, a solar and storage scheme developed on an existing solar farm site does offer a tantalising glimpse of a sustainable subsidy-free solar future into the 2020s and beyond. But one swallow does not make a summer, and it’s clear that very few such pathfinder projects can be developed subsidy-free in the foreseeable future.

In the context of what has happened to our sector since the 2015 general election, the Government would be unwise therefore to draw conclusions prematurely about the current health of the UK industry. Since 2015, employment in the sector has fallen by at least two thirds from a high point of well over 30,000. Large-scale solar deployment has stalled (notwithstanding isolated exceptions that nevertheless prove this rule), and the revised feed-in tariff has seen a dramatic year-on-year drop in rooftop installations. In 2015, there were 155,000 new domestic installations that year receiving the feed-in tariff. In the first six months of this year, the number was less than 5,000. It is undeniable that the sector suffered unnecessarily as a result of knee-jerk policy making in the aftermath of the 2015 election where solar was wrongly and public blamed for the LCF overspend. 

Ministers are keen to describe UK solar as a success story, and so it is. But what we need now from the Government is certainty and partnership for the future, rather than basking in past successes. The fact is, as the recent REN21 report showed, positive policies are still vital to the solar industry internationally. It is ironic that Solarcentury, a stalwart of the UK sector since the late 1990s, is now exporting successfully our UK solar expertise literally all around the world, while the UK domestic market remains in downturn.  

We need Ministers to build on the successes of the past, not assume that it is ‘job done’. Part of that will involve a change in mind-set in Whitehall – a previous Minister confirmed there are no solar champions in the Department of Business, Energy and Industrial Strategy (BEIS), which is quite extraordinary given the importance of this technology. In a recent Parliamentary written answer to a question about solar redundancies, BEIS Minister Richard Harrington MP said that: “many of those who work in solar are also skilled in other building trades, and will move between these with changes in demand.” It’s hard to imagine such a dismissive answer to questions about employment levels in other low-carbon economy technology success stories.  

For at least two years, the industry trade body the Solar Trade Association (STA) has been calling for a package of measures to ensure that solar can access a level regulatory and policy playing field. This includes action to reduce the burden of business rates on solar rooftop installations and to reduce the rate of VAT on solar storage. Charging people 20% VAT for batteries retrofitted to existing solar installations runs completely counter to the Government’s narrative about the importance of storage and the leading role that the UK can play in that emerging market. We are hopeful for action on this front in the forthcoming Budget.

The lack of a level playing field can also be seen in other policy areas. In particular, it is a nonsense that one of the cheapest renewable technologies, and the most popular, remains locked out of the Government’s competitive auction process for Contracts for Difference (CfDs). This is the mechanism that has seen a halving of the support level required for deploying new offshore wind from 2022. Quite rightly, this has been hailed as a potential game changer in the context of the eye-watering £92.50 strike price at 2012 prices needed for new nuclear. But solar inexplicably has been caught up in the fallout from the Conservative Party’s opposition to, and manifesto commitment to end support for, onshore wind. The reality is that solar could also deploy today at prices approaching half those required for Hinkley Point C. Yet we remain locked out of the scheme in a bizarre rejection of market forces. Including cheaper solar again in the CfD process would help to re-energise the UK market and help to put further downward pressure on solar and other technology costs and benefit bill-payers. It’s such an obvious policy move that it’s hard to understand what is holding Ministers back.

Finally, and inevitably, Brexit remains a destabilising factor in terms of solar industry investment in the UK. For our own part, Solarcentury is active all over continental Europe where markets are recovering nicely and we will have to make a decision in early 2018 on key issues such as headquartering and other contingency planning. In the meantime, Brexit does actually open up the prospect of helpful policy changes, including the possibility of scrapping VAT altogether for solar and other energy efficiency measures, and an end to the red tape of the EU’s unwelcome minimum import price for solar modules. Both issues add unnecessarily to solar costs in the UK. 

After a damaging two years of policy changes, there is now an opportunity for positive action leading to a renewed period of stability and certainty for investment in our industry. The solar industry success story deserves better than another policy round of one step forwards, two steps back.

Seb Berry is the Director of Corporate Communication at Solarcentury and Vice Chair of the Solar Trade Association

The views expressed in the article are those of the author, not necessarily those of Bright Blue

Nuclear reactors: is big beautiful?

Nuclear power has long been a controversial source of energy. Detractors point to high infrastructure costs and difficulties associated with storing nuclear waste, amongst other concerns. Advocates, however, view it as a clean and reliable alternative, which the grid requires as the country steadily shifts away from coal and other fossil fuels which we have relied upon for decades.

But last week, the car giant Rolls-Royce released a report on small modular nuclear reactors (SMRs), outlining how they think the technology – first developed several decades ago to power submarines – could foreseeably bridge some of the differences in opinion between pro- and anti-nuclear voices, and usher in a “once in a lifetime opportunity” for Britain to be at the forefront of nuclear technology. Such bold claims, however, require scrutiny – given Rolls-Royce’s commercial interest in the technology’s adoption, and also the relatively untested nature of SMRs as part of the energy system.

Typically defined as nuclear reactors which can generate up to 300 megawatts of electrical power, and can be produced in a single factory on a repeated basis – i.e., ‘modularly’ – SMRs have been touted by their supporters as a way for the UK to tap a reliable source of energy, able to ensure the lights stay on when the sun isn’t shining or the wind isn’t blowing.

One of the main selling points of energy generated by SMRs – at least compared to conventional large-scale nuclear projects such as Hinkley Point C in Somerset – is cost. An economic fact true of most goods and services is that increased and repeated production has a tendency towards falling average unit costs – what economists would call economies of scale. For larger nuclear projects, which are effectively produced as ‘one offs’ every few decades or so, designers have been unable to exploit the potentially lucrative economies of scale because the actual technology involved typically changes to such a significant extent with each project. However, for SMRs, the opportunity to do so is theoretically much greater. Owing to the fact that a factory may fabricate many several SMRs, financial savings in materials and alike allow for a lower cost per reactor to be achieved, ultimately manifesting itself as a lower cost per unit of usable energy generated.

Others have highlighted the fact that financing SMRs could be more attractive to investors, relative to large-scale nuclear plants. Reasons for this are broadly twofold: on the one hand, capital expenditure costs will be lower given that the reactors will be much smaller – allowing a more diverse pool of investors to consider financing a project; on the other, the asset will begin generating dividends far sooner, because it can be built and operationalised more quickly, again, due to its smaller size. This could therefore mean that investors might agree to a lower strike price for their energy generated, given the fact they will not have to factor in more of a guarantee on their return on investment.

SMRs may not just make financial sense, but they could also play a vitally important role in expanding our nation’s ‘energy flexibility’, through helping to decentralise energy production. Decentralisation of energy can be advantageous for the environment because when energy is consumed close to where it is produced, transmission losses are minimised. Developments in other energy sources have already been heading in this decentralising direction for some time now – consider, for instance, solar photovoltaic panels atop people’s houses. Some have also suggested that because SMRs require less water for cooling than their larger cousins, they are more environmentally friendly in this respect, and could also help in bringing energy security to remote areas which may not be located close to seas or large rivers.

Nevertheless, questions do remain about SMRs. In this very blog, much of the financial case for them is based upon the theoretical assumption that economies of scale will be realised – and realised in sufficiently large proportions to warrant a revolution in the energy sector. Because the technology is so untested as a commercial source of electricity generation, estimates about how far costs will fall are difficult to accurately make at this stage.

Environmental NGOs have also criticised SMRs, largely on the basis that they are not strictly speaking a renewable form of energy generation – certainly, SMRs will still inevitably call for the intermittent disposal of spent nuclear fuel. Even if one is not inherently opposed to nuclear energy, it has been pointed out that nuclear waste is an area where large-scale plants have the upper hand over SMRs, because the latter would face a challenging coordination problem stemming from several nuclear sites all needing to dispose of individually lesser, but cumulatively equal, amounts of nuclear waste.  

Yet perhaps the foremost factor which could jeopardise the roll out of SMRs is the remarkable fall in the cost of certain forms of renewable energy, such as solar and wind power. Incidentally, these are technologies which have already very much felt the virtuous cycle of economies of scale themselves, as the costs of their parts have tumbled as they have become more and more widespread. Coupled with ongoing learning about how best to deploy renewables, and a fine tuning of the technology they utilise, wind and solar farms are now more efficient, and more cost-effective, than ever.

Indeed, in the aforementioned Rolls-Royce report, it is somewhat ambiguously claimed that they are “working towards” the medium-term target of £60 per megawatt hour of energy generated through SMRs. Initially, Rolls-Royce even concede that a figure of around £75 per megawatt hour is more likely. This would be noticeably more expensive than the £57.50 per megawatt hour of wind generated power, recently agreed to by two companies in the most recent Contracts for Difference auctions.

In 2015, the then Chancellor, George Osborne, signalled the Government’s ambition to explore new nuclear technologies – pledging £250 million into a nuclear research and development programme. Since then, it has launched a competition to invite engineers to submit their plans for the best value SMR design for the UK. As the nation continues its transition away from dirty and polluting fossil fuels, there is an ongoing debate about which technologies will power the UK forward. In theory, SMRs could have a number of potential benefits, relative to large-scale nuclear. But they also come with certain disadvantages, not least of which is their relatively untested nature.

Eamonn Ives is a Researcher at Bright Blue

Fishing for subsidies

Fish the world over are being removed from the oceans at an alarming and unsustainable rate. One estimate from a recent WWF report suggests that the populations of fish species which are caught by humans for food have halved in recent decades, with selected species witnessing even more pronounced declines in numbers. Approximately a quarter of all elasmobranchs – that is, sharks, rays and skates – for instance, verge upon extinction, primarily due to unsustainable levels of fishing. Strong and increasing world demand for fish and seafood derivatives look set to place an additional pressure on an already burdened resource.

The consequences of such relentless and unrestrained extraction can be catastrophic for ecosystems. The removal of apex predators from certain waters, for instance sharks and tuna, may trigger a mushrooming of species lower down the food chain, which can go unchecked in the absence of a natural control mechanism. Conversely, the overexploitation of herbivorous fish which arrest algal succession can spell disaster for marine environments, such as corals and coastlines, because the algae toxify waters and impinge upon the ability of reefs to take hold and flourish. Tackling overfishing, therefore, will be vital to preserve not only some of the most precious fish species, but also the wider environment at large.

Solutions to overfishing

An earlier blog post explored the possible introduction of ‘individual transferable quota’ (ITQ) systems into areas which are not currently subject to them, as a solution to the problem of overfishing. Quotas like these permit fishers to catch an allotted quantity of a species of fish over a certain period of time. Indeed, ITQs have proven to be at worst better than unregulated arrangements, and at best a genuine method of ensuring sustainable fishing. Yet, given the complex and politicised nature of ITQs, they have often proved challenging to implement in practice.

Even so, other, more moderate, solutions to the problem of unsustainable fishing are available. One particular impediment of efforts to move towards a more sustainable system of fishing, for instance, is the copious subsidies which enable an uneconomically large fishing fleet to exist. Whilst challenging to definitively calculate, aggregated fishing subsidies across the globe total an estimated $35 billion.  

First of all, it must be said that not all subsidies associated with the fishing industry are necessarily deleterious for sustainability. There are examples of desirable behaviour being encouraged through subsidies, such as incentivising fishers to trade in old, environmentally harmful fishing gear – like drift nets – for cash payments, which they can put towards newer, safer equipment. On some analyses, approximately $15 billion of subsidies worldwide are directed into broadly socially beneficial programmes – including funding for the rehabilitation of ecosystems, fisheries management schemes, and environmentally-oriented research and development.

The harmful effect of subsidies

Sadly, however, the majority of state-administered aid to fishers is not so ecologically ameliorating. The conservation group Oceana have calculated that as little as 1% of all subsidies granted by EU member states to their native fishing industries had beneficial consequences for the environment. Taking the UK in isolation, over €17.5 million of subsidy payments were classed as detrimental, over €160 million as ‘ambiguous’, and none at all were regarded as environmentally beneficial. 

Particularly perverse are so-called ‘capacity enhancing’ subsidies, which pay for the operational costs associated with fishing, such as fuel expenditure or port construction, thereby permitting a greater number of vessels to take to the seas than would be the case otherwise. Indeed, amongst developed and developing nations, an estimated 22% of all fishing subsidies are directed towards reducing the cost of fuel. In addition, research has found that 90% of capacity enhancing subsidies are granted to large-scale, industrialised fishers, as opposed to artisanal, subsistence fishers, which have less of an impact upon marine environments.   

Policies such as capacity enhancing subsidies are increasingly recognised as damaging to our seas, and hinder efforts to achieve sustainability in fish stocks. But not all subsidies are necessarily bad. Those which are tailored to encourage environmentally friendly practices will assist fishers to adapt how they operate for the better. The industry will also require some level of subsidy to pay for monitoring and data collection, each of which help to ensure the rebuilding of fish stocks and their maintenance thereafter.

Much in the same way as has been touted for land agriculture, when the UK withdraws from the EU, the chance arises for greater consideration to be given to how fishing subsidies are allocated. It is doubtless that reducing payments which are capacity enhancing will force some fishers out of the market. But if the government chose to do this, one option could be to reinvest the savings from curtailing capacity enhancing subsidies into measures which help our marine ecosystems to thrive. Further, for those fishers efficient enough to remain, they will do so within an environment which they can be sure will be economically productive for years and decades to come.

Eamonn Ives is a researcher at Bright Blue

How the illegal wildlife trade contributes to security concerns

Poaching and the illegal wildlife trade are, by definition, security threats to some of the Earth’s most endangered animals and least-common plants. The WWF estimate that as many as 20,000 elephants are killed each year, and that wild tiger populations have been decimated to just 5% of what their total strength was at the beginning of the 20th Century. Forests are being plundered at extraordinarily fast rates for their valuable and rare woods, which is in turn destroying entire ecosystems. Yet, as much as such illicit activities are threatening to the world’s natural environment, they are increasingly being recognised by security experts and politicians alike as safety concerns for humans, too.

Believed to be worth up to $23 billion per annum, the illegal wildlife trade – which includes dealing in ivory and animal skins, as well as rare plants and woods – is a multifaceted problem which involves nations both rich and poor. Naturally, therefore, criminal gangs stand to make a good deal of money by participating in what is one of the world’s most valuable black markets, along with drugs, human trafficking, and counterfeiting.

A multi-consequential issue…

The trade in illegal wildlife can spawn insecurity in a number of different ways. Most obviously, organised criminals and terrorist cells can directly partake in the trade, and plough the immense profits they make into wreaking havoc amidst human civilian populations. A report published by the Elephant Action League, for instance, claims that ivory trafficking in East Africa alone could be supplying up to 40% of the funds necessary for maintaining the international terrorist group al-Shabaab’s fighters. Criminals and terrorists are believed to view poaching as an attractive method of raising money because wildlife crime offers high rewards with lower risks, relative to other felonies.

Yet, it is not only intrastate actors who have exploited wildlife to bankroll their destabilising activities. A report from the International Fund for Animal Welfare highlights how rogue states – a most obvious source of insecurity for civilians – have historically financed themselves in part through the illegal wildlife trade, often turning their military might on megafauna like elephants and rhinos in order to harvest their valuable tusks and horns.

Another, more nuanced, perspective on how the illegal wildlife trade threatens human populations can be seen in the way that when natural capital is unsustainably extracted from an ecosystem, that ecosystem duly degrades. This creates insecurity on two fronts. Intrinsically, as the environment deteriorates, it becomes less able to sustain its inhabitants – jeopardising their very survival. But instrumentally, too, this in turn may drive the forced migration of so-called environmental refugees, potentially creating “inter-human conflicts” when the aforementioned refugees settle amongst other civilians, and resources become scarce or more contested.

Similarly, another thought-provoking yet all too often underappreciated source of insecurity posed by the illegal wildlife trade is the way in which it contributes to the prevalence of zoonotic diseases. The importation of live animals, or unsanitary bushmeat, serves as a serious hazard to countries one may not initially associate with contributing to poaching. Indeed, it is believed that the illegal wildlife trade has played a role in the proliferation of certain high-profile diseases, such as Ebola and SARS.

… requiring multi-dimensional solution

One can see from the above that efforts to quell the illegal wildlife trade need not exclusively be bound up in the conservation paradigm. Poaching can be inextricably linked to human security in terms of how it can fund terrorism and support rogue states, as well as creating environmental refugees and spreading diseases. Accordingly, some have argued that the trade in illegal wildlife ought to be conceptualised as a focus not only for conservation groups, but also Government departments such as the Ministry of Defence, the Foreign and Commonwealth Office, and the Department of Health.

Solving the problem of poaching will need to be a concerted and coordinated endeavour, best done through joined up Government and international collaboration where practicable. It will depend also on limiting both the supply and demand of illegal wildlife produce. On the former, this may be achieved through measures such as increasing funding for park rangers, and equipping customs officials with the latest technology to scan for would-be smuggled exports of illegal wildlife produce. Closer to home, wildlife groups have called on the Government to explore extending the trade in ivory prohibition to include pre-1947 ivory, as it is claimed that the loophole acts as a cover for the trading of that which was harvested post-1947 (i.e. possibly ‘fresh’ ivory), which can be difficult to age accurately.

On the latter point – lowering demand – it may appear to be an insurmountable challenge, given just how intimately products such as ivory or shark fins are linked to certain cultures. Yet, it would be premature to be overly pessimistic. Japan, for example, was once one of the world’s biggest importers of rhino ivory, but following stringent regulation and changing social attitudes, it now only imports a fraction of the total ivory it once did. In China, too, one advertisement campaign alone was found to lower respondents’ proclivity to purchase ivory from 54% to 26%.

When up against powerful and ruthless criminal organisations, conservationists may feel they are fighting a losing battle. Recently, however, there has been a trickle of good news – from wild tiger numbers increasing for the first time in over a century, to Nepal successfully ensuring that no rhino poaching took place for two whole years. But there is still much more that can be done. Raising the awareness amongst Governments of the ways in which poaching can threaten not only the world’s most endangered plants and animals, but also their citizens, could be a prudential place to begin. 


Eamonn Ives is a Researcher at Bright Blue

Net losses: solving fishing’s sustainability crisis

With respect to the UK’s fisheries, the Rt Hon Michael Gove MP spared no time at all in flexing his muscles as the new Environment Secretary. Just weeks into his brief, Britain’s withdrawal from the London Fisheries Convention had been triggered, in a move which Gove argued would lead to a “more competitive, profitable and sustainable industry”. Specifically, it paves the way for the UK to manage its own fishing quotas, as well as deciding who gets to access British waters. Done properly, this could result in huge gains for the natural environment.

Fisheries are an example of a common pool resource – whereby access to a resource is open to all. Coupled with rational individual actors, common pool resources rarely experience sustainability. In the absence of regulation, such resources will be perpetually exploited, until, eventually, they collapse entirely. This fact has long been understood, from economists-come-ecologists such as William Forster Lloyd, Elinor Ostrom, and perhaps most famously of all, Garrett Hardin, with his eminent 1968 paper The Tragedy of the Commons.

Scale of the problem

According to a report from the UN Food and Agriculture Organisation, approximately 58% of fisheries are classified as ‘fully fished’ (i.e. operating at, or close to, optimal yield levels), and a further 31% are overexploited, whereby they are fished at a biologically unsustainable level. WWF estimate that the global fishing fleet is between two to three times larger than what the oceans can realistically support. Closer to home, favourite fish species such as haddock and cod have been removed from the Good Fish Guide, a website run by the Marine Conservation Society which informs British consumers about the sustainability of various seafood species which they can expect to find at their local supermarket or fishmonger.

The problem of overfishing extends far beyond the specific species in question. Given just how intricately enmeshed marine ecosystems can be, an unnaturally rapid depletion of one species can have serious implications for many others. For instance, the unsustainable extraction of herbivorous fish from oceans can lead to elevated levels of algal growth, which in sufficient quantities can become toxic for other species which remain. Further, when essential keystone predators such as sharks and tuna are overfished, there tends to be a swelling in the numbers of fish species lower down the food chain, which can similarly knock ecosystems out of kilter.

As well as being environmentally troubling, overfishing poses obvious economic difficulties, too. Within the EU alone, it is thought that unsustainable fishing results in €3 billion of lost productivity per annum, taking an estimated 100,000 jobs along with it. Globally, the burden of declining fish stocks has fallen most heavily on the world’s poor, with estimates from the World Bank and the UN Food and Agriculture Organisation claiming that between 90% and 97% of those employed in the fishing industry – whose income is patently dependent upon reliable and plentiful fish stocks – come from developing nations.

Answers from the Arctic

Given the capricious and ever fluctuating nature of fish shoals, it may appear difficult to know where Governments can even begin to act, should they wish to implement policies to ensure that fisheries remain, or once again become, sustainable. However, that is not to say there are no antecedents whatsoever.

Perhaps the best-known example amongst environmental economists of a policy which has enjoyed success, at least relative to that of other schemes, is Iceland’s system of ‘individual transferable quotas’ (ITQs). Such quotas grant individual fishers the privilege to land a certain quantity of fish, typically by weight, within a given time frame. ITQs can also be traded, meaning that if a fisher wishes to relinquish all or part of their allowance, they can sell it to other, perhaps more efficient, players in the industry. Importantly, the amount of fish which can be extracted from the ocean will, or ought to, be set at a level which is ecologically sustainable – i.e. allows fish numbers to replenish at a rate equal to or quicker than that at which they are removed.

ITQs are seen to be better than the more rudimentary system of ‘total allowable catch’ (TAC), which simply states the amount of fish which can be extracted from the ocean by all involved, collectively. This has led to perverse and often dangerous consequences, such as ‘fishing derbies’, whereby competing fishers are effectively encouraged to recklessly race against each other to harvest as much fish as they possibly can until the TAC is exhausted.

It is true that ITQs do not offer a perfect solution to the problem of overfishing. They require strong (i.e. expensive) governmental oversight and enforcement to function properly, and the task of setting the quota still falls on fallible bureaucrats, susceptible to regulatory capture and Hayekian knowledge problems. In this respect, the tragedy of the commons could quickly become the tragedy of government failure. Indeed, there is widespread anxiety amongst the environmental and scientific community that the existing EU quotas are worryingly generous, and do little to effectively engender sustainability in fishing. 

There are also questions about how quotas ought to be allocated to fishers. Generally, they are either based on historical catch, or through an auction. The former can be contentious in the sense that it may unfairly entrench incumbent players who already enjoy a privileged place in the market. Whereas with the latter, fishers are critical of the added cost they have to bear. Nevertheless, when appropriately administered, ITQs do appear to be an intuitive way to circumvent the problem of overfishing.  

Conclusion

Fishing has long been an intimate part of many countries’ history. Particularly for island nations like the UK, it has often been the only genuine source of income for entire communities. It is not surprising, therefore, that many feel an innate desire to shelter fishers from what some may regard as the vicious and unfeeling realities of global market competition.

However much one may wish to help fishers, though, it is increasingly apparent that the unsustainable nature of the current system does not do so. As scientific knowledge twinned with economic understanding has advanced, it is clear that to continue as we currently are would only store up problems in the long run. ITQs have been shown to bolster fish stocks, and are certainly one possible avenue to explore on the voyage to sustainable fishing.

Eamonn Ives is a researcher at Bright Blue