09 Apr 2014
There are few more effective ways to get someone to glaze over than to strike up a conversation about boilers. Although, in fairness, a discussion about insulation or double glazing may run it close. But the inherent challenge faced by those seeking to drive consumer demand for the various domestic energy efficiency measures now on offer need to be overcome, not least because some exciting developments are underway in the world of boilers.
Today has seen the long-awaited launch of the domestic element of the Renewable Heat Incentive (RHI) scheme, which will now offer households the opportunity to secure quarterly payments based on how much renewable heat they generate. There has been plenty of grumbling about the lengthy gestation for the scheme, while concerns remain about how effective the initiative will prove at ferreting out any rogue traders who seek to take advantage of increased demand for renewable heat systems. Others have highlighted the relatively high cost of carbon savings delivered by renewable heat systems compared to alternative technologies. But despite these reservations the scheme represents a significant boost to the green economy and could deliver a major breakthrough for the emerging green home market.
The merits of the scheme are two-fold. Firstly, as a world-first mechanism for driving adoption of renewable heat technologies it provides a boost to a much neglected clean tech area that will need to expand rapidly if the UK and other industrialised economies are to meet their long term carbon targets. Over 80 per cent of UK heating is provided by fossil fuels and in 2009 around 32 per cent of all greenhouse gas (GHG) emissions in the UK resulted from heat related activities. We already know how to decarbonise electricity supplies and the technologies required to do so are falling in price all the time. But there has been less progress in the development and adoption of renewable heat technologies, making the emergence of lower cost renewable heat systems a national priority.
The introduction of the RHI for both businesses and households promises to drive the market for heat pumps, biomass boilers, and solar thermal systems, fuelling technology innovation and driving down costs through economies of scale. The resulting emissions savings may be initially costly, but there is the potential for the UK to build a world-leading, potentially export-led, new clean tech market.
Secondly, the Domestic RHI forms the final piece in the puzzle, the final piece of lagging in the loft if you will, of the government's wider green homes strategy. Again, Ministers have faced plenty of justified criticism about the various delays and technical difficulties this strategy has endured through the controversial changes to the microgeneration feed-in tariff scheme, the cuts to the Energy Company Obligation (ECO) efficiency scheme, the watering down of green building standards, and the decidedly lukewarm reception for the Green Deal energy efficiency financing scheme. But the fact that each of these policies could and should be improved does not detract from the fact the UK now has a comprehensive and attractive package of measures to drive the transition towards greener and warmer homes.
The RHI means it makes financial sense for virtually everyone operating off-grid oil-fuelled heating to switch to renewable alternatives. The feed-in tariff and Domestic RHI means it makes financial sense for virtually everyone with south facing roofs or suitably located gardens to install solar PV, solar thermal, or micro-wind systems. The ECO and Green Deal means it makes sense for everyone to assess the energy efficiency of their home and undertake upgrades where appropriate. All of the policies means that it makes sense for anyone worried about rising energy costs or carbon emissions to see if their home is suitable for onsite power or heat generation.
There are valid questions about whether these schemes will disproportionately benefit the wealthy and middle class given the money and time needed to undertake such improvements. But the combination of grant funding and clever financing promises to deliver upgrades at no upfront cost across all social classes. Moreover, the scaling up of the green home market will benefit everyone in the long term as it cuts emissions, enhances energy security, and helps to bring down the costs of clean technologies to the point at which they come as standard in every home.
However, if the long-running travails of an insulation and energy efficiency sector that has always offered a product that makes financial sense are anything to go by, it is clear that being on the right side of return on investment calculations does not on its own create a market. The onus has to now be on the thousands of green businesses that provide Green Deal upgrades, heat pumps, solar panels, and biomass boilers to get out there and drive demand for the exciting technologies and services they offer. The introduction of the coalition government's last major green home policy means there is no longer any excuse.
To drive this market the clean tech sector needs to take a leaf out of the playbook of those industries that have created mass market demand for high value products - the auto sector, the IT and home entertainment industries, even the travel industry. They need to make their products attractive, effective, and, if possible, desirable. They need to target the early adopters and influencers who can create the initial market and force it into the mainstream (in short, and I know this may seem self-serving, they need to target the BusinessGreen audience). They need to use intelligent and proven advertising and marketing techniques to reach their target market. And then they need to deliver an exemplary product and service that quickly rides any cowboys out of the town and creates strong word of mouth demand.
Can this be done with energy efficient boilers and triple glazed windows? It is fair to say that even Don Draper would struggle to make them appear sexy. But as with any new product successful marketing is all about positioning. A modern, high tech, sustainable and warm home is better than a dated, functional, unsustainable and cold home. The studies showing how "contagious" solar panels spread through a neighbourhood prove there is huge pent up demand for clean technologies - clean technologies that polling reveals huge public support for. Even the dullest clean technology can be made exciting with the right messaging.
The UK's green businesses have an array of attractive, effective and desirable green products to offer, and the introduction of the RHI, feed-in tariff, and Green Deal means that in many cases they are now just as financially viable as they are technically viable. The green economy continues to face far more challenges and uncertainties than it should, and Ministers should be doing much more to drive the investment and business models we urgently need. But for the green home and office sector the policies are in place, the technologies are in place, the demand is there to be created - it is time to engage the consumer and start selling.
Take a train journey pretty much anywhere in the UK and two things become quickly apparent: this is indeed a green and pleasant land, and significant parts of it are neither.
Around many of our cities, motorways, rail lines, out of town shopping centres, power stations, ports, and factories there is often found acre after acre of brownfield, semi-rural or semi-industrial land that is underutilised and underpopulated. I would never display the lack of manners characteristic of Tory peers and dismiss this land as "desolate", but even if beauty is always in the eye of the beholder you would be hard pressed to find many people willing to defend these areas' aesthetic appeal.
If you take a similar journey in many parts of Europe you will find these areas are used to great effect to generate clean energy through the deployment of small scale and often community-owned wind farms, but in the UK such installations remain about as rare as an MP's apology. This presents a huge opportunity to utilise semi-industrial and semi-rural areas to harness the UK's broadly excellent wind resources, generating clean energy, jobs, and investment in the process. However, it is an opportunity that a Prime Minister who is nominally committed to localism, tackling climate change, and cutting energy bills is about to dismiss out of hand.
According to various reports, David Cameron is highly likely to include a commitment to effectively "ban" new wind farm developments post-2020 in a desperate attempt to keep restive anti-wind backbenchers happy. It remains unclear how this ban will be imposed, but the most likely option seems to be a cap on the amount of power onshore wind farms can generate.
Perversely, this could be spun as something of a victory for the renewables sector, on the grounds the proposed "compromise" with those Tory MPs who want an immediate moratorium on onshore wind would allow the 8.2GW of wind farms currently in the planning system to continue to move forward. Meanwhile, green Tories appear to have secured a commitment from the Prime Minister for continued support for other forms of renewables, such as offshore wind and solar, post-2020 even if they cannot get him to agree to a decarbonisation target for the power sector. But if this is a victory it threatens to be a particularly hollow one, as the proposed ban will only serve to push up the cost of the clean energy transition while also undermining increasingly successful efforts by the industry to work with communities to tap into the consistently high levels of public support renewables projects receive.
In addition, it begs the question as to why a Conservative Prime Minister who rode into office on the promise of a greener government and increased localism is pursuing such a statist means of crushing a popular clean technology that typically commands over 60 per cent public support?
The answer is that the combination of improved wind turbine technology, staggering inconsistency at the heart of Conservative energy policy, and the Prime Minister's desperate attempts to appease the right of his own party have boxed him into a corner. He has evidently decided the UK should restrict the development of onshore wind farms to keep Conservative Party members happy, only to find that the tools for doing so are strangely limited.
Cameron could, of course, seek to cut subsidies for onshore wind farms in an attempt to undermine the financial case for onshore wind development. But here's the thing - cuts are already happening. Subsidy levels were reduced last year as the cost of wind energy fell and the government is now planning to move to a system of auctioning support contracts that will reduce subsidy levels further. In fact, if the experience in Brazil and other countries that have used auctioning is anything to go by, this approach could lead to increased wind farm investment as it only serves to highlight how well-located onshore wind farms are one of the most cost-effective forms of renewables - so much so that they can sometimes even undercut gas power on cost. You could, of course, deny onshore wind farms any form of subsidy, but that would deal a major blow to the government's entire electricity market reform programme, spark all kinds of legal repercussions, and torch what remains of the Prime Minister's green credentials.
Alternatively, Cameron could use the planning system to make it even harder to develop wind farms. But again, this is already being done. Local communities have numerous courses of action available when trying to block wind farm developments and UK planning rules are among the most robust in the world, rightly requiring planning committees to take account of everything from wildlife impact to aesthetic considerations. Any attempt to tighten planning laws still further for onshore wind farms alone would invite very awkward questions as to why the government is singling onshore wind farms out for special treatment at a time when it is planning to tear up subterranean property rights for householders in order to make life easier for fracking developers. Why should the concerns of someone worried about a turbine on the horizon be more important than someone worried about the solidity of their own home's foundations?
That leaves Cameron with some form of a moratorium as the only available tool should he want to bring an end to onshore wind farm development. But even here, it is not as simple as banning or capping new developments. You could seek to cap the amount of power that will be subsidised each year, but how do you set the cap when wind power output varies each year? And what do you do if falling onshore wind energy costs and rising fossil fuel costs make projects viable even if subsidy payments are capped three quarters of the way through the year? Alternatively you could just bluntly cap the amount of onshore wind power taken onto the grid each year. But why would a country that is trying to decarbonise turn off clean energy assets or block their future development? Does the cap only cover new projects or would it also apply to upgrades at existing sites as next generation wind turbines promise to deliver more power?
All these questions would need to be answered, and that is before you even get onto the wider point, raised by former Lib Dem Energy and Climate Change Secretary Chris Huhne this morning, around how the Tories can justify arbitrarily blocking the development of one of the cheapest forms of renewables, while simultaneously cutting support for energy efficiency and promising more support for much more costly offshore wind?
Of course, the Prime Minister is right on one thing: there will come a point when the public will say "enough is enough" when it comes to onshore wind farm development. There will come a point at which either all sites that are suitable from both a technical and aesthetic perspective have been developed or public support for onshore wind weakens so much that it becomes democratically unacceptable for development to continue (although, if coal, fracking, and nuclear is anything to go by, this public support threshold is remarkably low). But Cameron does not have a crystal ball - he cannot know when this point will come. If he did have such powers of prophecy then he could propose a ban for that point, at the same time as quietly reshuffling those ministers who will one day embarrass him with their innumerate inability to understand how expenses work.
But currently he cannot know whether the UK will need more or less onshore wind energy in the 2020s. The rollout of several more gigawatts of capacity over the next six years may make onshore wind farms as unpopular as coal power is now. But equally the success of community-owned projects, an oil price shock, or a nuclear disaster may make wind farms more popular than ever. Cameron understands the need to keep energy options open perfectly when he is praising the potential of fracking and carbon capture and storage, and yet for some reason the same rationale cannot be applied to onshore wind.
Instead he is apparently pursuing plans for a blanket ban that would be statist, costly, and very likely unworkable. But most of all he is trying to solve a problem that does not exist. We already have a policy framework that will drive down subsidies and impose strict planning requirements on developers. Why not just let it do its job? Let auctions ensure that only the best located and most efficient new projects are financially viable and let planning committees decide whether new projects are in the wider interests of the communities in which they are located. Let those projects that have secured sizable community support proceed in the same way that you let fracking, nuclear or new road projects proceed, and block those projects that are genuinely inappropriate, precisely as already happens.
Don't let a vocal minority completely derail a decarbonisation strategy that is in everyone's interests. And don't let backbench dinosaurs turn a Prime Minister who once promised to deliver a new era of environmentalism and localism into a hypocrite.
George Monbiot has a necessarily angry and hard-hitting column in today's Guardian analysing the staggeringly reckless response to yesterday's IPCC report from those who think it highlights humanity's ability to adapt to climate impacts.
As the Telegraph yesterday ran an editorial seeking to downplay the IPCC's projections and suggest that "instead of continued doom-mongering... thought needs to be given to how mankind might adapt to the climatic realities", Monbiot challenged the growing network of columnists who seem to think the global economy can and should simply adapt to climate change to identify which bit of the world they are prepared to lose.
"When our environment secretary, Owen Paterson, assures us that climate change 'is something we can adapt to over time' or Simon Jenkins, in the Guardian today, says that we should move towards 'thinking intelligently about how the world should adapt to what is already happening', what do they envisage?" he asks. "Cities relocated to higher ground? Roads and railways shifted inland? Rivers diverted? Arable land abandoned? Regions depopulated? Have they any clue about what this would cost? Of what the impacts would be on the people breezily being told to live with it?"
Monbiot is entirely right to ask these questions, not least because those who suggest the response to climate change should shift in its entirety from mitigation to adaptation so rarely want to answer them in any meaningful way. Although, coincidentally, one of the cheerleaders of the adaptation-only paradigm, economist and Telegraph contributor Andrew Lilico, did hint at a potential response to these questions yesterday afternoon. In the wake of the IPCC report's publication, I found myself in a Twitter exchange with Lilico in which I challenged his assertion that the report reinforced his argument that climate mitigation efforts should be killed off in favour of adaptation. "Any thoughts on how Tropics adapt to 4C world?" I asked. "I imagine Tropics adapt to 4C world by being wastelands with few folk living in them," Lilico responded. "Why's that not an option?"
And to think, those advocating an end to efforts to tackle greenhouse gas emissions get upset if you accuse them of callous recklessness.
However, while I am tempted to join Monbiot in "lashing out at the entire town" over this latest strand of climate scepticism (and while not all of those proposing an adapt-only approach to climate change are sceptical about climate science there are plenty who have a long track record of dismissing scientists warnings on this topic), I'd argue the increased focus on adaptation actually provides some cause for optimism for those of us who want to see much more ambitious action on climate change across the board.
Firstly, in calling for more focus on climate adaptation the Telegraph and its supporters have created a perverse consensus on climate change. If they want more investment in adaptation measures part of the response from green businesses and NGOs should be, "great, let's get on with it". Environmentalists should call what I suspect is a bluff from an adaptation lobby that in large part still refuses to accept the warnings presented by the IPCC and demand its support for the campaign to increase spending on flood defences and deliver improved supply chain resilience. Green campaigners should ask, "if you want adaptation why aren't you criticising inadequate adaptation budgets? If you think we can effectively adapt, where are your proposals for ensuring agricultural yields don't collapse? If you think the abandonment of certain areas is likely, how do you propose to maintain global security during such a transition?
As the IPCC report makes painfully plain, the adaptation-only argument is seriously flawed, but it could have the silver lining of making concerted action to enhance climate resilience more likely.
Secondly, the emergence of this adaptation argument highlights the extent to which the climate sceptic community has fragmented in recent years into those who cling to the idea that manmade climate change is not happening, those who think it is happening but won't be that bad, and those who think it is happening, it will probably be bad, but we can adapt to it. Significantly, the more influential commentators and politicians who are sympathetic to climate sceptic arguments tend to be found in the third of these cohorts, which in some ways is fortunate, because it is an argument that is so self-evidently weak that it is highly unlikely that it will gain serious traction with either policy makers or the public.
The "climate change isn't happening" or "it won't be that serious" hypotheses are collapsing under the weight of scientific certainty and, more importantly, real world evidence. It is hard to credibly maintain there isn't a problem when the evidence of both historic climate records and peoples' own eyes tells them that there is. But the adaptation-only argument similarly fails this "seeing is believing" test. It begs Monbiot's question: "If a small, rich, well-organised nation cannot protect its people from a winter of exceptional rainfall - which might have been caused by less than one degree of global warming - what hope do other nations have, when faced with four degrees or more?"
It also rests on a dodgy rationale that similarly invites public rejection. "Climate change is happening and is probably extremely serious" acknowledge advocates of a 100 per cent adaptation approach, "so let's do nothing about it besides building a few more sea walls". In accepting the scientific terms of the debate, often for the first time, those who say they want nothing more than adaptation acknowledge the gravity of the risks we face and then run straight into the scientific warnings that adaptation alone will not be enough. They also highlight the paucity of their ideas for dealing with related environmental challenges such as air pollution, ocean acidification, energy insecurity, and biodiversity loss - how do you get vulnerable species to fit into your adaptation strategy? Answer, you don't.
Those who want us to focus solely on adaptation invite incredulity from political leaders, business executives, and a public who increasingly accept the need and attractiveness of decarbonisation, as well as the economic growth on offer, and are doubtful that adaptation at the necessary scale is even possible, let alone desirable. The adaptation school of thought could prove hugely damaging to action on climate change if too widely adopted, but I'd argue it is unlikely to gain too much traction in a world where the two largest clean tech markets are the US and China, and many of the world's most powerful multinationals want more ambitious efforts to cut emissions.
Moreover, it also opens up an opportunity for dialogue between environmentalists and some of their more influential detractors that has not been there in the past. The one thing the likes of Lilico and Times columnist Tim Montgomerie can agree on with most green campaigners is that current efforts to sharply reduce global greenhouse gas emissions have not yet proved successful. We may disagree on what to do about this, but it is a much shorter journey from "let's focus on adaptation" to "let's also focus on new ways to cut emissions", than it is from "climate change isn't happening".
They won't admit it, but those who want climate change strategy to be boiled down to a focus on adaptation are edging towards the green consensus on the urgent need to tackle escalating climate risks. In challenging them to tell us precisely how they plan to deliver such adaptation we might just convince some of the cheerleaders for this reckless strategy to acknowledge that we probably should continue to pursue mitigation measures as well, just to be on the safe side.
I often joke that editing BusinessGreen is like conducting my professional life in a permanent state of cognitive dissonance, although if I'm honest it is less a joke, more an insight into the ongoing psychological tension endured by all environmentalists.
Every day we run stories about both the exciting clean technologies and business models that can deliver a genuinely sustainable global economy and the rapidly escalating environmental risks that threaten the collapse of that self-same global economy. Given that green economic progress is predicated on an awareness of the viable low carbon technologies that are available and the risks we face if we fail to deploy them, we typically try to maintain a balance between these two competing visions of the future. It is this green utopian-dystopian paradox that results in the cognitive dissonance that characterises so many environmentalists as they simultaneous accept that we are on the brink of a green economic breakthrough and probably doomed to a century of climate misery.
However, it is all but impossible to look at the Intergovernmental Panel on Climate Change's (IPCC) latest climate impact report and be anything other than daunted and dispirited by the scale of the challenges we all face. There are so many terrifying predictions - all backed with the level of credibility and certainty that comes with the knowledge that this is the most peer-reviewed scientific exercise in history - that it is hard to know where to start. But here are a few of the more worrying warnings from the world's leading scientists: food supplies are already being impacted by climate change; wheat yields are expected to fall two per cent a decade; yields of some key crops could fall 25 per cent by mid-century; fish catches in some areas could fall 60 per cent; food prices may soar by 84 per cent by 2050; coastal cities will face escalating flood risks; extreme weather impacts will become more costly and frequent; climate change is likely to fuel conflict; oh, and your coffee will taste worse.
This litany of escalating climate risks is scary as it stands, but it becomes even more horrifying when you consider two factors that are rarely given sufficient weight by climate change commentators. Firstly, the scale of prospective impacts is so severe that they only have to be half right for the global economy to be facing a serious problem - and the world's finest scientific minds are absolutely convinced they are much more than half right. And secondly, the impacts are already with us and are escalating fast. The days of scary predictions that will affect the world in 2100 are gone. We are talking about scary impacts by mid-century, which means anyone under 50 has a reasonable chance of experiencing them. Today's report confirms anyone born in the past 10 years is staring down the barrel of some potentially catastrophic climate risks during the second half of their lives.
The fact that there are still people who wish to downplay these risks is laughable, although any laughter this sad reality prompts should be contemptuous in its nature. That editors of influential newspapers can read the latest IPCC report and decide to run with the angle that a warming world will lead to a boom in Arctic tourism is mind-boggling. That some media commentators, political leaders, and corporate bosses can continue to give house room to reckless and discredited arguments about net benefits from climate impacts or dubious debates about the merits of delaying efforts to reduce climate risks is a disgrace. The impacts we can expect from climate change are too wide-ranging and too severe to justify a watering down of efforts to tackle climate risks, no matter how much those who advocate a do-nothing or do-next-to-nothing approach argue to the contrary.
Political leaders, business leaders and investors need to ask themselves who they want to believe when it comes to assessing climate change risks, the UN, the Royal Society, US Defense Department, NASA, the world's largest insurers, and every major national scientific body in the world, or the tiny rag tag bunch of keyboard warriors, contrarian academics, and shadily funded libertarian 'think tanks'?
However, while it is tempting to succumb to pessimism or rail against those who are even now scouring the IPCC report with the sole aim of identifying an angle they can spin to suggest climate impacts will not be that bad, neither response will help political and business leaders deliver the response that is so urgently required.
The one question the latest wave of climate warnings should prompt is, what can we do?
Green business leaders, politicians and environmentalists need to wrestle the green utopian-dystopian paradox back into a position of balance, and from there break it completely by delivering the optimistic sustainable future that remains entirely possible. There is mounting evidence that this can be done. It is notable that this IPCC series of reports will include a detailed study later this year of the clean tech response needed to slash emissions. There is also a clear shift in the rhetoric accompanying today's report, with IPCC working group co-chair Chris Fields acknowledging that climate change is a "downer" and that there is a need for a greater focus on the "real opportunities for 21st century innovation" offered by the response to climate change.
This optimism is fuelled by the rapid progress clean technologies and green businesses have made over the past few years. Ever since the global financial crisis hit predictions have been made that the green economy would be derailed, instead it has gone from strength to strength as investment has ticked upwards, clean technologies have matured and fallen in price, and political leaders have maintained, and in some cases strengthened, their commitment to climate action. As The Telegraph's Geoffrey Lean observed over the weekend, the build up to the next major UN climate summit in Paris next year is being characterised by a cautious optimism that the US and China are edging towards an agreement to slash their greenhouse gas emissions.
What can businesses do in response to the IPCC report? They can do everything in their power to fuel this optimism by factoring climate risks into their investment decisions, rapidly mobilising investment in cost effective clean technologies, such as energy efficiency measures, renewables and electric vehicles, enhancing the climate resilience of their operations and supply chains, supporting green R&D, and using their political leverage to demand economy-wide policies that aid decarbonisation. There are pioneering multinationals and green business start-ups on every continent that have already established best practices on all of these fronts, which can now be relatively easily embraced by their peers. Faced with the risks presented by the IPCC, this is nothing more and less than the sensible course of action for any business.
At an individual level it is inevitably far harder to have an impact on a problem that is global in its nature, but that is not to say that people cannot take action. You can and should seek to reduce your climate impact, be it through eating a bit less meat, avoiding a few more flights, investing your money in a responsible fashion, or using your purchasing power to reward green businesses. But arguably the biggest impact individuals can have is in talking openly and honestly about the risks we face. Put climate resilience and energy efficiency on your agenda at work, write to your MP about your concerns, ask about where your pension is invested, complain to your newspaper if they seek to mislead you about climate impacts. It is only by creating a large and vocal constituency for climate action that we will provide businesses and politicians with the confidence they need to deliver that action at scale.
Is this enough? Will it deliver the step change in global emission reductions and climate resilience investment we need to combat the potentially catastrophic risks our agricultural systems face? Looking at the IPCC report it is hard to be optimistic, but on days like today it is worth recalling a blog post last year from the inspiring US environmental commentator David Roberts on the subject of "hope and fellowship". In it he argued that while the scale of the climate threat is daunting in the extreme, we can draw hope from the fact economic and technological change is "non-linear", rapid and unexpected transformations in the way we live our lives can and do happen. Hope remains that clean technologies can deliver just such a revolution.
And even if they don't, that does not mean we should stop trying. As Roberts argued: "Remember, there is no 'too late' here, no 'game over' - it will be a tragedy to shoot past 2 degrees to 3, but 4 is worse than 3, and 5 is worse than 4. Being unprepared for any of those will be much worse than being prepared. The future always forks; there are always better and worse paths ahead. There's always a difference to be made."
For today, pessimism is in many ways the only rational response to the IPCC's warnings. But those fighting for a green economy cannot wallow in that pessimism for too long. The green utopian-dystopian paradox can be broken, we don't have to live in a state of cognitive dissonance. It is not too late to choose the right fork in the path.
25 Mar 2014
At last. After four long years of speculation and consternation, planning applications and policy U-turns, Siemens today confirmed it will invest £160m and create 1,000 new jobs through its "Green Port Hull" project. It is a "massive vote of confidence", "excellent news for the people of Hull and the Humber", "a huge boost to the UK renewables industry", and "a major coup for the British wind industry". For once, the breathless plaudits feel justified, this really is a very big deal for the UK's green economy, and by extension, the economy as a whole.
The implications of Siemens decision to locate a flagship manufacturing wind plant in the UK are two-fold: practical and symbolic.
On a practical level this is arguably the biggest single boost to the renewables industry since the dog days of the Brown administration were marred by Vestas' decision to slash its wind turbine manufacturing operations on the Isle of Wight. The decision to locate a large scale turbine manufacturing plant in the UK will not only help to maximise the economic benefits from the UK's planned expansion of its already world-leading offshore wind fleet, it will also help cut the costs of that fleet, reducing the impact on bill payers.
This promise of lower cost turbines, helps break the chicken and egg conundrum that has seen manufacturers stall decisions on locating new plants in the UK over concerns about the scale of the market they will serve, at the same time as experts have warned the market can only be maximised if domestic plants help bring down the cost of offshore wind energy. As Siemens' Matthew Knight explained to BusinessGreen a few weeks ago, the company could only justify the investment if it was confident that a sizeable offshore wind market of around 12GW to 14GW would be built by the end of the decade. Confirmation that Siemens fully anticipates healthy growth in the market - and has almost certainly received encouraging signals about future orders from developers - provides a hugely encouraging signal for the wider market.
This signal should drive efforts to develop an even stronger engineering skills base in the north east and help mobilise further investment in the supply chain that will serve Siemens' new factory. Moreover, if Siemens is confident that a large scale market for its turbines is developing then there is a greater chance that other manufacturers will follow suit and move forward with their promised investments in Scotland and the north east, creating a wider domestic supply chain and market competition that will only serve to drive down costs further.
There are legitimate complaints to be made about why it has taken four years to deliver a decision on such a strategically important project, and detractors will rightly point out that we are still a long way from delivering the comprehensive wind energy supply chain that will serve to maximise economic gains and exports from the industry. It will take years to correct the decades of political and policy errors that have left the UK importing so many of the clean technologies it needs to deliver decarbonisation.
But Siemens plant promises to play a major role in correcting some of those errors, in part through the practical impact of its investment, and, perhaps more importantly, through the symbolic power of the UK finally playing host to a flagship renewable energy manufacturing plant.
Rightly or wrongly, symbols matter. Yesterday afternoon, I chaired an event for the Sustainable Energy Association on the potential implications of next year's election during which business leaders from across the energy efficiency and onsite renewables sectors bemoaned the way in which green improvements in the built environment were not treated as a national infrastructure priority. We all know energy efficiency improvements represent the most cost-effective means of cutting carbon emissions and enhancing energy security, but political and corporate leaders all too often have their head turned by the excitement and prestige offered by big green infrastructure projects. It is these projects - projects like the London Array, Hinkley Point, and now Siemens Green Port - that create headlines and photo opportunities, and as such they can tend to marginalise the smaller scale localised green improvements that will also prove crucial to the green economy.
This is a problem that needs to be addressed, but in doing so it would be wrong to dilute the symbolic power of these big green projects. In one swoop Siemens has demonstrated that one of the world's biggest engineering conglomerates trusts the UK's Climate Change Act and Energy Act and is confident that a transition to a lower carbon energy mix will be delivered over the next two decades, regardless of the noises off from the right wing of the Conservative Party. Others will now feed off that confidence.
The company has also provided a boost to an emerging constituency that will champion the green economy in the coming years. With Siemens factory joining Nissan's Leaf manufacturing line in Sunderland and plenty more renewable energy projects planned along the east coast it will be a brave politician from that part of the world that starts to talk down the low carbon transition - their constituents' livelihoods depend on its success. Making the green growth that economic data shows has been building for much of the past decade more visible and tangible, will only serve to reinforce political and policy support for the sector.
It will also serve to generate tax receipts. Much has been written about the Treasury's instinctive and ideological support for oil and gas, but Number 11's institutional fixation on fossil fuels is driven by the historic boost to tax revenues the industry has provided. By showing that large scale clean tech facilities employing thousands of people can generate taxes and economic growth too, Siemens and its peers will help to tilt the balance of Treasury power towards the green economy.
Most of all though, it is clean tech factories from the likes of Siemens and Nissan, coupled with solar panels from the likes of IKEA and Sainsbury's, and backing from the likes of the CBI and all three main political parties that demonstrates that a large scale low carbon economy is both possible and in the country's economic interests. Symbols matter and a bellwether project like Siemens new factory sends waves through a sector in a way that has a wider impact than the simple investment alone, welcome as it is. In offering such a ringing endorsement to the UK's green economy, Siemens has not only served to create more jobs and economic growth in a region that needs both, it has also served to make the economy-wide green transition we urgently need more likely.
ABOUT JAMES' BLOG
Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray