Blocking a decarbonisation target is a gift to foreign clean tech firms

29 Oct 2013

Onshore wind turbine construction

First, a caveat: the defeat of the decarbonisation target amendment is not a crisis for the green economy. Nor is it a calamity, a catastrophe, or a cataclysm for the clean tech sector. Climate Change Minister Greg Barker has a point when he argues the debate on a decarbonisation target is something of a "diversion". The Energy Bill is edging towards Royal Assent and when it is granted it will drive huge investment in clean energy projects for the rest of this decade, backed by over £7bn in support mechanisms, a number of crucial Treasury loan guarantees, and a broad, if at times shaky, political consensus.

But that said, the failure of peers to back a decarbonisation target for 2030 represents a huge missed opportunity that will make the cost of the low carbon transition higher than it would otherwise have been, while ensuring many of the resulting financial and job opportunities will be snapped up by foreign companies and governments.

To understand this debate you need to put yourself in the shoes of an offshore wind turbine manufacturer, nuclear components provider, or sustainable biomass fuel supplier. You know a wave of new clean energy projects are coming between now and 2020 (or in the case of nuclear one new project is coming between now and 2023), but while you suspect further projects may come during the 2020s you are also concerned the Chancellor's much touted dash-for-gas will badly constrict the market for your clean technologies post-2020. Do you invest when a multi-million pound factory will require orders during the 2020s to generate attractive returns?

Some will decide they will take the risk and we are likely to see a number of encouraging announcements from the clean energy supply chain in the coming months and years. But, as many companies have consistently argued, others will hedge their bets and either delay their investment decision until the next government declares whether or not to back a decarbonisation target in 2016 or opt to locate new facilities on the continent instead.

The government has countered, not unreasonably, that these investors already have plenty of certainty. The Climate Change Act means the UK faces legally binding emission reduction targets that mean decarbonisation of the power sector is all but inevitable during the 2020s, while the government is currently pushing for an even more ambitious EU target for 2030. It is a fair point and the likelihood is that the UK will continue to invest in a mix of clean energy technologies throughout the 2020s.

But investors will be forgiven for asking for an explicit commitment to decarbonisation when a single party conference speech can apparently lead to the Prime Minister tearing up a key plank of the UK's green policy framework. It is an open secret that a decarbonisation target is being blocked because the Chancellor wants to leave the door open for more unabated gas investment in the 2020s. Clean technology manufacturers will remain understandably reluctant to invest when they fear a Conservative government would introduce a whole new energy strategy that could leave their factories shuttered within seven years of their being opened.

Why does this matter? Well, as the independent Committee on Climate Change has argued the failure to build a domestic supply chain for wind turbines, solar panels, nuclear reactors, and biomass power stations will push up the cost of decarbonisation and result in a failure to maximise the economic gains that are on offer.

We already know our nuclear reactors will be developed by French and Chinese companies, while our offshore wind farms will be developed by firms from Denmark, Germany, Ireland and Abu Dhabi, to name but a few. But the failure to deliver a decarbonisation target means these flagship projects will also be ordering many of their parts from France, Germany, Denmark, and the US. Moreover, if we don't sort out looming skills shortages, many of the jobs on offer will also go to overseas contractors. There is a sizable and ambitious clean energy supply chain developing in the UK, boasting a host of hugely competitive companies that will no doubt secure orders as a result of the low carbon transition. But the prospects of this supply chain expanding and being able to really take on more established overseas rivals has just been dealt a blow by the government's failure to agree on a decarbonisation target.

Barring a repeal of the Climate Change Act and a ditching of EU climate targets - both of which, for all the bleating of the Tory Tea Party tendency, remain very unlikely - the UK will continue to invest in the decarbonisation of its power sector. But without a decarbonisation target we risk a blow-for-blow repeat of the experience of other infrastructure industries, as contracts, revenue and returns all flow to overseas conglomerates, many of which are state-owned. Imports will increase, carbon emissions will rise, and jobs will be lost overseas, driving up costs in the process.

All of which makes Conservative opposition to a decarbonisation target and misleading claims that the policy will drive up costs extremely hard to understand. Yes, a decarbonisation target would require the continuation of some clean energy subsidies into the 2020s, but the large scale deployment of these technologies post 2020 would help slash wholesale power costs, curbing bills for households and reducing the UK's exposure to volatile global gas prices, while driving clean tech export opportunities. Moreover, this transition is going to have to be made one way or another as the UK responds to escalating climate change threats, we might as well do it in a manner that minimises costs and maximises economic returns.

The failure to deliver a decarbonisation target in the Energy Bill is a missed opportunity for UK clean energy manufacturers and developers, which will once again leave our economic competitors rubbing their hands together and marvelling at our failure to deliver a coherent domestic industrial strategy. The absence of a decarbonisation target is not a fully fledged disaster, investment in clean energy will continue, it is just that the biggest beneficiaries will not be British companies, British workers, or British consumers.

Whoever forms the next government should make the adoption of such a target one of their top priorities - the future of the UK's competitiveness in the fast-expanding global clean tech market depends on it.

A blog post is not enough

25 Oct 2013

Hurricane from a satellite's view

Earlier this week, the BBC News website gave us a snapshot of the future. Each of the top four articles - the UK government's nuclear deal, npower hiking energy prices, Australian wildfires bearing down on Sydney, and Tesco's admission over 60 per cent of its salad bags end up wasted - were directly and indirectly environmental stories. Squint and you could have mistaken it for the home page of BusinessGreen.

The environmental movement will have to get used to this media spotlight. Far from being confined to the niche that many experts predicted following the financial crash of 2008, green issues have never really slipped from the public, business and political consciousness - and now they are back with a vengeance. This should not come as a surprise, given so many of the meta-narratives for this century have environmental issues at their root. The EDF nuclear deal and the row over rising energy bills are driven by the urgent need for energy security and decarbonisation, not to mention the cost and public acceptance challenges these requirements present. Tesco's brave admission of the shocking levels of food waste it produces reminds us how dysfunctional the entire global agricultural system has become. Australia's wildfires are a terrifying example of the climate impacts scientists have been warning about for years.

Every week there are hundreds more stories like this emanating from the energy-climate-resource nexus that will shape our economy and our politics for decades to come, plus hundreds of optimistic stories detailing the inspiring technologies, business models, and campaigns that are seeking to overcome these challenges.

And yet, the rising levels of awareness that should result from accurate reporting of these immense challenges are being undercut by an increasingly desperate political and media counter attack against the very policies and technologies designed to address escalating economic and environmental risks. As individuals and businesses start to engage with the implications of the energy they use and the food they eat, or, in the case of Australia, face up to the worsening climate risks they face, siren voices become ever louder, arguing that peoples' eyes deceive them, there is nothing to worry about, and nothing that can be done.

The Sun's Trevor Kavanagh offered a neat distillation of this climate sceptic counter attack this week, declaring, as smoke billowed around Sydney, that if climate change meant wearing shirt sleeves in autumn "let's have more". It would have been funny if Kavanagh's insouciant, arrogant, complacent recklessness was not a tacit insult to everyone on the planet who is younger than him.

The point at which environmental concerns and clean tech solutions really start to break into the mainstream was always going to be the point at which the defence mounted by those constituencies that benefit most from the fossil fuel-reliant status quo would reach a peak of intensity. Hence the recent concerted attacks on any and all green policies and the deeply flawed insistence that climate change is categorically not something to worry about for at least the next few decades.

It would be nice to think that respected editors of serious publications would realise on their own that not everyone who kicks against scientific consensus is Galileo, sometimes it's just David Icke. But sadly the last iceberg will be drifting pass the North Pole before certain publications acknowledge that we are engaged in a dangerous experiment with the atmosphere.

These attacks will fail in the long term - the falling cost of clean energy, the global battle for resources, the reality of climate change impacts, all mean the global transition towards a more efficient and cleaner economy will continue. However, as the devastating recent analysis contained in Duncan Clark and Mike Berners-Lee's new book The Burning Question shows, emissions are currently rising exponentially leaving us with very little time to engineer the necessary transition. The defence of the status quo - a defence that is willing to cherry pick data, defy rational arguments, fail to offer an alternative strategy for addressing climate risks, and u-turn on policies at the drop of a polling point - has the ability to slow the necessary economic transition enough to condemn us to decades of rolling environmental crises.

The key question for those green business leaders who are committed to this transition is how to break through the lines of defence erected by those who support the status quo and the immense and escalating environmental risks that go with it. It is a question that will become ever more important in the run up to the domestic debate over the UK's fourth carbon budget and the international debate over the UN's 2015 climate summit.

The reality is that business leaders who accept that climate change and related environmental challenges are a serious and growing threat to their prosperity simply have to get off the sidelines and make the case for action more forcefully.

BusinessGreen's new columnist, E3G chairman Tom Burke, has a nice line about how the business community is split into "climate makers" and "climate takers" - those fossil fuel and agri-business companies who are making the climate through greenhouse gas emissions and those who will have to take the hostile climate that results. Like any binary distinction it is overly simplistic. "Climate makers" will also have to take the climate change they are causing and, somewhat perversely, energy companies are among those who are most aware of the need for climate resilience measures. Meanwhile, "climate takers" use the energy and resources produced by the "climate makers" meaning they are also indirectly responsible for emissions. But the division has value given that for every "climate maker" who stands to benefit financially from the carbon economy there are hundreds of "climate takers" who are staring down the barrel of massive and costly climate disruption.

It is these "climate takers" who to date have been far too quiet in the environmental, economic and policy debates that are raging over our best response to escalating risks. Yes, they have committed to ambitious sustainability strategies, invested billions of dollars in clean technologies, signed up to various communiques making the case for a low carbon economy, lobbied governments on specific environmental policies, and in some cases embarked on the development of genuinely green business models. All of this is hugely admirable and should continue. But set against the scale of the risks they face and the strength of the defence of the status quo these steps are insufficient. Sometimes it feels as if green business leaders have never come across a problem that they don't think a concerted campaign of letter-writing will solve.

What is needed is a more ambitious, co-ordinated and vocal campaign from all the "climate takers" who privately admit that they are deeply concerned about environmental risks. Those companies leading the green transition need to invest far more effort in publicising the huge clean tech commitments they are making. They need to master the media game in the way the "climate makers" have and ensure their arguments are driving the headlines, not getting consigned to the letters pages in response to the latest flawed climate sceptic cover story. They need to call out the commentators and leave the trade associations that are acting against their interests by advocating inaction on climate change. They need to use their political capital and be willing to publicly and privately stand up to politicians who want to jeopardise their long term prospects by undermining climate action.

There is a rump of highly influential companies that are moving in this direction. The insurance industry, institutional investors, almost the entire IT industry, and the retail and food giants are all deeply concerned about climate impacts and are willing to say so. But the volume and intensity of their arguments are struggling to match those presented by the defenders of the status quo, particularly when it comes to the whipping up of a confected media frenzy, as we are seeing with the current row over "green levies". Too often green businesses are left on the back foot, belatedly responding to attacks rather than proactively making the case for a better economy. Too often their concerns over climate risks or green policy changes go unheeded and their achievements in developing and installing clean technologies go unreported, all because they are failing to invest the same level of talent and money in communicating their position as the supporters of the status quo invest in blocking action.

I've often thought that one of the reasons the public fails to respond more to climate change warnings is that we are all victim of the comforting assumption that if something was that serious someone would be doing something about it. They hear scientists, politicians, business leaders, and campaigners warn that climate change is a major threat, and then it all goes quiet again for a few months, and everyone is left to think, "well, it can't be that bad then".

As drivers of progress and generators of prosperity, responsible business leaders need to use every opportunity to shake us all out of our climate apathy and raise the alarm, at the same time as promoting how clean technologies will create a more successful and healthy economy. In the run up to the 2015 climate summit green businesses need to get vocal, get organised, and perhaps even get a little angry. We don't know precisely what will happen as greenhouse gas emissions continue to rise, but we do know we are recklessly gambling with the future of the global economy. Responsible businesses everywhere need to make the case for action as forcefully as possible, because the alternative is being forced to "take" a climate that poses a grave threat to economic growth and stability. Getting the chief executive to write a blog post about it is no longer enough.

How David Cameron is preparing to disappoint everyone on 'green levies'

23 Oct 2013

The front door of 10 Downing Street

David Cameron caused a furore at Prime Minister's Questions today by declaring that "we need to roll back some of the green regulations and charges".

Leaving aside the wisdom of such a spectacular U-turn from a Prime Minister who once declared people should "vote blue, go green", the key question is whether such a move will work, both politically and economically. On both fronts the answer is a categorical no.

As I've argued previously, axing green levies will do little to help those struggling with high energy bills, because those self-same green levies are used to fund schemes that curb energy use and reduce our reliance on volatile fossil fuel imports. Cutting green schemes will provide a vanishingly small short term reduction in bills, while actively undermining efforts to address the structural issues that are leading to higher energy bills. Cutting a green scheme in the UK will do nothing to address soaring global demand for energy in China and India, it will only make us even more reliant on fossil fuel imports.

But just as importantly, Cameron's cynical green levies gambit won't work politically either, and not just because polls show a majority of people are in favour of green policies.

The fact is that the Lib Dem's will not countenance a major overhaul of "green levies" as long as they are in the coalition (apparently the faces of Nick Clegg and Ed Davey at PMQs were a picture in barely concealed frustration). This means the likeliest result Cameron can expect from his much-trumpeted review of "green levies" is a cosmetic change to one or two green schemes or the axing of the carbon floor price, which has few friends outside the Treasury, all of which would do no more than shave a couple of quid off annual bills.

So Cameron is boxing himself into a very tight corner from which he is likely to anger both those in favour of green policies and those opposed to them. Any move to cut "green levies" will lead to howls of outrage from environmentalists who will accuse him of hypocritically shooting dead his formerly beloved husky. Meanwhile, those calling for the end to all green levies and an end to this climate change nonsense, will declare victory for about 30 seconds before realising that the result of any "green levy" changes is a decrease in average energy bills equivalent to the cost of a cup of coffee.

Of course, there is some nuance to Cameron's assertions that we both need some green levies and need to roll back some others. The reality is that some of the government's renewables and energy efficiency schemes could be improved. But this nuance is likely to be lost amid the angry realisation that any improvements will not miraculously deliver deep cuts in energy bills.

"Ah, but what about the election," Tory opponents of the green agenda will cry. "Once we are rid of these tree-hugging Lib Dems we can go to the country promising an end to all 'green levies'." Well, they could I suppose, but even if you ignore the fact that polling shows a large chunk of the public are in favour of green policies, how do you explain Cameron starting the week by hailing a nuclear deal that will enshrine a clean energy levy on energy bills for 35 years?

The simple fact is that with or without green levies, energy bills will, barring a miracle, remain high and volatile for years to come because of structural market issues. Moreover, the UK's energy infrastructure needs upgrading and this comes at a cost that someone has to pick up, whether it is the energy bill payer or the taxpayer is largely irrelevant. You can argue over whether this upgrade should focus on wind farms, nuclear reactors or shale gas, but significant investment will be required regardless. Even if you were to cave to the scientifically illiterate climate sceptic lobby and ditch all commitments to clean energy - which you can't credibly do because try as the right wing media might you can't wish away climate change - there would be considerable upward pressure on bills. Cameron knows these hard truths, which is why he is floundering so badly with his attempts to suggest the government can miraculously reduce energy bills.

The only answer lies in a much more ambitious effort to improve our nation's energy efficiency. The failure of our political class to make this case credibly and at length is little short of a national disgrace.

Jumpers, petitions and the only way to tackle rising energy bills

18 Oct 2013

trying-to-keep-warm-in-uk

I'm not sure precisely when the 'debate' on energy bills and 'green levies' hit its latest low point. Perhaps it was the launch of The Sun's petition calling for an end to "hated green levies"; perhaps it was the flurry of Tory blog posts arguing for the scrapping of green taxes while failing to even acknowledge climate change as an issue; or perhaps it was the sight of Jeremy Paxman asking the Energy and Climate Change Secretary whether he wears a woolly jumper, firing the starting pistol on a fatuous media frenzy that resulted in a hapless Downing Street spokesman eventually having to clarify whether the Prime Minister thinks people should or should not wear jumpers. No doubt, you'll each have your favourite.

What is clear is that even as encouraging reports emerge suggesting the 'quad' at the top of the government has rightly concluded that while 'green levies' need to be constantly monitored there is no quick fix to rising energy bills, the campaign to axe 'green levies', and by extension the UK's wider decarbonisation agenda, is gathering momentum.

The strategy is as transparent as energy bills are opaque, but it is none the less effective for that. Right wing outriders demand an end to all 'green levies' in the interests of those 'hardworking families', and in doing so they create the political space that makes the government look reasonable when it cuts just one or two green schemes or argues next year that 'yes, decarbonisation is important and will continue, but we have to consider cost implications so we are going to scale back the fourth carbon budget'.

There are many problems with this campaign, but the most glaring is that it doesn't even attempt to explore what would happen if it were to prove successful and result in 'green levies' being axed or, more realistically, cut. Suffice to say, the repercussions would not be pretty.

The most immediately obvious impact of a moratorium on 'green levies' would be that energy bills should be cut by around £100 as energy companies wake up to find their dreams have been realised and the funding they have to provide to energy efficiency and clean energy schemes is no longer required. Further savings might be on the cards as some of the network costs required to connect clean energy projects to the grid may no longer be required, but the reality is the impact on bills would be to cut them by around 10 to 15 per cent, effectively taking them back to the level they were at just 18 months ago.

Of course, such a saving is not to be sniffed at, every little helps. But even after this theoretical £2 a week saving, tens of thousands of people would remain in fuel poverty, while the schemes designed to help them reduce bills through energy efficiency measures would no longer exist.

More important still, and this cannot be stressed often enough, the majority of the increase in bills experienced in the past three years has been driven by the upward trend in global wholesale gas prices. Analysts are divided on whether this trend will continue, but with China and India driving ever-higher levels of demand there is a real risk that even as shale gas production expands prices could continue to climb. Add in the perennial risk of geopolitical tension with Iran or Russia leading to supply disruption and it is easy to envisage a scenario where the £100 saving is quickly wiped out by market developments. We could very quickly be back where we started, only this time there would be no green windmills for The Sun to tilt at.

But a short-term saving that does nothing to resolve the underlying problems caused by high and volatile energy bills would represent the upside of the utterly misguided campaign to scrap 'green levies'. The fallout would also result in the immediate end to funded domestic energy efficiency schemes and grants for the most vulnerable households; a collapse in clean energy investment; tens of thousands of lost jobs; missed EU renewable energy and efficiency targets and the fines that come with them; the shelving of popular community energy projects; a breach of legally binding emissions targets; the unwinding of the government's entire electricity market reform programme; the failure of negotiations for new nuclear power plants; the loss of billions of pounds in new energy investment; a new dash for gas that would undermine the UK's climate change strategy and take several years to orchestrate, leading to an increased risk of blackouts; condemnation from international bodies such as the IMF and OECD, which have urged the UK to stick to its decarbonisation agenda; higher levels of energy demand than anticipated resulting in higher prices and, again, an increased risk of blackouts; increased reliance on those self-same gas imports that have been the primary driver of rising energy bills in the first place; and the end to any hope that the UK can get off the fossil fuel hook and benefit from the transition towards clean energy technologies that are becoming more cost effective all the time.

Both sides of the coalition know this scenario is completely untenable – the Lib Dems and green Tories get it because they understand the merits and the necessity of a low-carbon transition, while the Conservative leadership gets it because they know scrapping 'green levies' won't really solve the problem and will leave them open to the accusation they are leaving fuel-poor pensioners and families to shiver on without any support beyond advice to pull on a sweater.

So what can be done to help insulate people against energy price rises that are consistently outstripping increases in wages?

Labour leader Ed Miliband would argue the answer lies in a price freeze that would 'reset' the energy market. This proposal certainly has popular appeal and I am not among those who argue it would prove unworkable – there are plenty of examples of countries that have shown price controls can work (even if there are also some that have demonstrably failed to work). But while it may help – and we won't really know how effective a freeze may or may not prove until Labour provides more information on what the promised 'reset' entails – it does little to address the underlying challenge, namely that global wholesale prices and the urgent need for more investment in new energy infrastructure will continue to put upward pressure on energy bills.

The government understandably resists the temptation to point out that the UK's energy bills are among some of the lowest in Europe and instead maintains increasing competition in the market and encouraging people to switch suppliers represents the most effective means of holding down prices. But while greater competition will always be welcomed, this approach similarly fails to address the primary drivers of higher bills.

Some of the more credible commentators calling for an end to green tariffs have argued that, rather than being scrapped, schemes such as the Energy Company Obligation (ECO) efficiency scheme and renewable energy subsidies should be paid through general taxation. This approach has much to recommend it, not least the fact that it would be more progressive than the current system of imposing levies on energy bills. But there are huge risks attached to such a shift that extend well beyond the inevitable short to medium-term disruption to efficiency and clean energy projects. Funding energy efficiency and clean energy subsidies from general taxation may be an attractive idea in principle, but it exposes schemes to even higher levels of political risk, would require tax increases or spending cuts to fund and would result in the long-term vision required by the decarbonisation agenda being constantly challenged by short-term demands for taxpayers' money to be diverted to whichever issue is commanding headlines that week.

The most likely outcome of the current furore is that the government will make some cosmetic changes to one or two of the 'green levy' schemes and hope it can be spun as decisive action, even as it has negligible impact on bills and results in yet more policy uncertainty for the energy investors we desperately need to tackle looming blackout risks. Because the simple fact is that in the short to medium term increased energy prices are an unavoidable reality. It is political kryptonite to utter this fact out loud, but that does not make it any less true. Greater competition in the market may help, improvements to make energy efficiency and clean energy schemes more cost effective may help, cost controls may help, even responsibly managed fracking may help, and some of these proposals should be explored, but none will do more than shave a few quid off bills in the coming years. Meanwhile, the upward pressure on bills caused by soaring global energy demand and the urgent need to correct decades of UK infrastructure underinvestment continues to escalate, only to be complicated further by the unavoidable reality of climate change and the manner in which the decarbonisation it demands rules out a coal revival or an unrestricted dash for gas.

All of which leaves us with the one thing the government can do to help hold down energy bills: energy efficiency. You don't have to advise people to wear jumpers, but you do need to make it even easier for them to use less energy through improvements to the UK's disgracefully inefficient housing stock. Nothing can be done about energy prices, but through a combination of incentives and regulations something can be done about energy bills. The government is making some progress on this front, but more needs to be done, and fast. ECO should be expanded and improved, not cut and neutered. The Green Deal financing scheme should be urgently reviewed with every mechanism for driving adoption given serious consideration. Support for clean energy needs to be monitored constantly to ensure that it is at an appropriate level, while also recognising that households and businesses should be encouraged to generate their own power, not least because in the long term renewables will help to hold down prices by reducing reliance on volatile fossil fuels.

There is no easy fix to the energy bill crisis, only a decades-long transition towards cost-effective clean energy and energy-efficient properties. All responsible politicians need to recognise this and reject the siren voices calling for cuts to the very schemes that are trying to tackle the market dysfunction that has left the UK at the mercy of global wholesale gas prices. Because, unlike comments about the merits of wearing jumpers in the cold, tearing up the UK's energy strategy is a gaffe the country can't afford.

Do you really want your oil from the Arctic?

18 Oct 2013

oil-barrels

Oil is oil, right? The fuel that powers the cars, jets, tractors and industry that drives the global economy is a commodity. Quality standards ensure, for the most part, that each barrel of oil, each visit to the petrol pump, is the same as any other. Meanwhile, the combination of OPEC and global exchanges set a price, meaning the underlying cost of each barrel of oil is the same.

But anyone who peeks beneath the bonnet of the global oil industry quickly discovers that, when it comes to how oil is sourced, not all oil is the same.

The litany of scandals that have afflicted the oil industry would lead many environmental campaigners to conclude there is no such thing as a "clean" barrel of oil, but it is clear some barrels are cleaner than others. It is always simplistic to draw binary distinctions, but it could be argued that there is such a thing as "good" and "bad" oil, or, if you'd prefer, "bad" and "less bad" oil.

For example, the UK and US governments may face justified criticism over the tax breaks they hand their domestic oil industry and their mixed record of enforcing environmental and safety standards. But at least environmental and safety standards are in place and inspection regimes, for all their faults, are implemented. Similarly, a recent report from the Carbon Tracker group demonstrated how Brazil's emerging offshore oil industry could continue to play a role in a carbon constrained world, given that it has the ability to extract oil in a relatively carbon efficient fashion.

Not all parts of the oil industry are so lucky. Canada's tar sands are infamously producing some of the most emissions-intensive oil in the world, burning through the planet's available carbon budget at a rapid clip. The standards and regulations imposed on the UK and US oil industry are far from perfect, but they are a paragon of green best practice compared to the governance found in countries such as Nigeria and Ecuador where multinational companies have been able to run roughshod over local environmental concerns.

And then there is the Arctic. Should a business that is committed to sustainability be using fuel that has been sourced from one of the world's few remaining pristine habitats, particularly when the record of those companies seeking to drill in some of the planet's most hostile conditions is already laughably poor? Whatever you think of Greenpeace's tactics, can an ethical business that is committed to ensuring human rights are respected across their supply chain be entirely happy with oil exploration that is supported by the Russian state's willingness to charge environmental protesters with piracy?

It is these questions that underpin Brendan May's fascinating proposal for "Arctic Free Oil". The oil majors obviously have a huge vested interest in ensuring that oil remains an interchangeable commodity delivered through opaque supply chains. But why should businesses that refuse to accept a lack of supply chain transparency for other environmentally risky commodities - such as timber, palm oil and growing numbers of minerals - be kept in the dark about the origins of the commodity that arguably has the worst environmental record of the lot? The answer is they shouldn't.

The oil industry will inevitably argue it is too complex or costly for it to track where each barrel of oil has come from and sort them into piles of "good oil" that has been extracted and refined in an efficient and responsible manner and "bad oil" that ran the risk of Arctic spills or unacceptably high carbon footprints. But the timber industry has largely managed to do exactly that through independently verified certification schemes. The palm oil industry is currently working to do something similar, and despite some justified criticism of the sustainable palm oil label is making encouraging progress. We are even seeing auditors venturing into war zones in an admirable attempt to bring an end to the use of conflict minerals. When seen in this context it should not be beyond the wit of oil executives to disclose whether oil has come from the North Sea or the Arctic Sea.

The realities of climate change mean that we need to end our reliance on oil and transition towards cleaner fuels, while leaving more and more oil in the ground. The business community has a crucial role to play in enabling this transition, through the development and deployment of clean technologies. But this transition will take time and while it progresses ethical businesses have an obligation to ensure the oil they do use is sourced in as environmentally responsible manner as possible.

As May has argued, there is a closing window of opportunity to make "Arctic Free Oil" a reality. The technical challenges faced by companies exploring in the Arctic mean that none has managed to make it work as yet. Now is the time for the world's biggest corporate consumers - the airlines, the food giants, the logistics companies - to declare that they want no part of this reckless oil rush and will not purchase fuel from those companies working in the Arctic. The PR benefits for such companies would be immense, the business case for Arctic exploration would be hugely undermined, and, most importantly, the signal would go around the world that not all oil is the same.

ABOUT JAMES' BLOG

Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray

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