Showing posts from November 2012

Stop Press: The green business case for backing Obama

05 Nov 2012

Garden view of the front of the White House

When it comes to entirely predictable news stories, reporting that green businesses and NGOs are endorsing President Obama ahead of tomorrow's election is right up there with the exclusive revelation that turkeys are not that keen on Christmas. Those who are concerned about environmental issues are never going to vote for a Republican party that has turned climate change denial into a policy position. And while they might be frustrated at a lack of progress from Democrats, they know only one candidate in this election wants to see America's burgeoning green economy prosper.

But as Americans prepare to go to the polls, it is worth exploring again how an election that, on this side of the Atlantic at least, has failed to capture the public imagination is still of immense importance to both the US and global clean tech and green business sectors.

The gap between President Obama and his Republican challenger Mitt Romney on environmental issues is wider than the Grand Canyon, and while no one would accuse the president of delivering unqualified success for the green economy, there is almost universal agreement amongst green commentators that a Romney presidency would do immense damage to America's burgeoning clean tech sector.

Romney stands accused of changing his mind more often than the weather when it comes to climate change and environmental policies, but we can draw some pretty reasonable conclusions about the steps he would take if he proves the polls wrong and finds himself in the White House next January.

We know from his campaign commitments that he would allow the Production Tax Credit for the wind industry to lapse at the end of this year, bringing an end to the recent surge in onshore wind farm investment.

We know from his stump speech that he would approve the Keystone XL tar sand pipeline, allowing carbon-intensive tar sand oil to flood the US market.

We know from his much-trumpeted Energy Plan that he would seek to make US energy independent by 2020, primarily through a huge increase in domestic fossil fuel extraction.

We know from his talk on deficit reduction, that renewable energy projects and low carbon infrastructure funding programmes would be the first in line for swingeing budget cuts, even if that meant cutting clean coal funding towards an industry he claims to inherently support.

We know from the Republican platform that he would declare all-out war on the Environmental Protection Agency (EPA) and the Obama-era rulings that allowed it to start regulating greenhouse gas emissions. And we also know that he would give serious consideration to selling off all federal lands, on the grounds that "private ownership has been our best guarantee of conscientious stewardship".

Finally, we know from his response to Superstorm Sandy that the Republican Party will not allow him to so much as mention climate change, even as climate change impacts become ever more severe. The pressure on him to withdraw fully from the UN-backed negotiations to deliver a new international climate change treaty would be immense.

If his campaign is any indicator, a Romney presidency would take George W Bush's energy and environmental policies and put them on steroids.

In contrast, a second term for Obama promises an acceleration of the president's all-of-the-above energy strategy with its support for renewables, nuclear, gas, and clean coal, the continuation of EPA rules seeking to restrict greenhouse gas emissions and drive clean technology investment, and, in the wake of Superstorm Sandy, a renewed focus on climate change mitigation and adaptation.

The extent to which he will be able to enact this strategy depends on either the Democrats securing control of Congress at some point in the next four years or, more unlikely still, the GOP engaging in bi-partisan co-operation in order to forge an effective environmental and energy policy framework. Neither of these miracles is likely to occur, but as Obama has shown over the past four years through vehicle emissions standards and astute regulation, it is possible for a president to support the development of the green economy without control of Congress.

If the polls are to be trusted, green businesses should be preparing for an Obama victory that would deliver four more years of gradual progress on environmental issues, perhaps mixed with an occasional bold move as the post-Superstorm Sandy public mood demands more ambitious action on climate change. Yes, many greens will be remain frustrated at Obama's continued support for domestic oil drilling, his repeated failure to categorically rule out the Keystone XL pipeline, and his pre-Superstorm Sandy near-silence on climate change. But, faced with a straight choice between a president who clearly wants to do something to address existential environmental threats and one who declares himself unsure whether there is even a problem with the climate, greens are only going to jump one way.

Inevitably, this assessment of the respective campaigns comes with the disclaimer that many green businesses would continue to prosper regardless of who wins tomorrow. After all, energy efficiency remains a goal of politicians across the spectrum, while many a dyed-in-the-wool Republican state in the South and Midwest boast advanced wind and solar markets, because developers have realised that the cost of these low carbon technologies is falling fast. Countless states will continue to provide supportive policies for clean tech firms, even if a President Romney refuses to acknowledge that the country needs to cut greenhouse gas emissions.

However, we saw between 2000 and 2008 how a president who is openly hostile to environmental policies and clean technologies undermines investor confidence and makes it significantly harder for green businesses to secure the political and public support that they need.

A Romney presidency would be bad news for the green economy, while an Obama victory would promise a welcome boost to green businesses across the US and further afield. It could also hold out the (still sadly unlikely) prospect of a new US narrative being forged on climate change and green growth. A narrative that might finally force the GOP to realise the wisdom in Republican Senator Lindsey Graham's recent warning that the party is "not generating enough angry white guys" to win elections using its current play-book, and acknowledge that it needs to take a more responsible stance on climate change and green growth, amongst a whole host of other issues. Now that really would be news worth reporting.

We need progress on energy efficiency, so why are we so coy about ditching inefficient products?

05 Nov 2012

Power button on standby

Just weeks before the Energy Bill finally crawls, blinking and disorientated, into the light of day, it appears that we are finally going to have a debate on the need for more urgent progress on energy efficiency.

In response to mounting pressure from the indomitable Andrew Warren of the Association for the Conservation of Energy and a compelling new report on energy efficiency incentives from Green Alliance, ministers at the Department of Energy and Climate Change (DECC) appear increasingly willing to accept that the bill should include measures to promote efficiency.

Energy and Climate Change Secretary Ed Davey has used several recent public appearances to hint strongly that he wants to see the Energy Bill's planned "capacity mechanism" include an element to drive "demand management" and "demand response". Strip away the jargon that makes the energy efficiency debate so difficult to follow and it looks as if Davey wants to see more incentives to encourage businesses and households to save power, particularly at times of peak demand.

Add in the fact that both Shadow Energy and Climate Change Secretary Caroline Flint and chair of the Energy and Climate Change Select Committee Tim Yeo have said they are likely to table amendments to ensure energy efficiency is included in the bill if the government fails to do so, and we have reason to be optimistic that some much needed progress could be on the cards.

The case for some kind of demand response capacity mechanism or energy efficiency incentive is hugely compelling, not least because study after study has shown it is far cheaper to reduce the amount of electricity we use than build new generation plants to meet our staggeringly wasteful demand. As Yeo observed recently, energy efficiency is the one aspect of the green economy that even climate sceptics can endorse - after all, it just makes good financial sense. Throw in the government's soon-to-be-launched Green Deal financing scheme and the UK could be within a few months of having the foundations of an effective energy efficiency strategy for the first time in its history.

But while energy efficiency incentives should definitely be introduced - either through the efficiency feed-in tariff mechanism advocated by Green Alliance or the inclusion of demand management in the energy bill's capacity mechanism, as hinted at by Davey - there is also a case for complementing these new incentives with a simpler and more cost effective mechanism for driving efficiency: standards.

Energy efficiency standards and their policy cousins, mandatory labelling schemes, differential taxes, green procurement standards, and outright bans on inefficient products, remain one of the most effective means of driving both the adoption of energy efficiency measures and the development of new efficient technologies. What's more, they cost cash-strapped governments next to nothing when compared to more expensive incentive programmes.

Virtually every story of energy efficiency standards is a story of success. Vehicle fuel efficiency standards adopted in the EU and US have been integral to slashing emissions and driving innovation in cleaner automotive technologies; the UK's reduced road tax rates for cars that meet low emission standards have been such a success that the government is having to look at ways to compensate for lost revenue as millions of drivers switch to greener cars; A-G ratings for electrical appliances save consumers hundreds of pounds a year, just as green IT labelling schemes have led to rapid improvements in energy efficiency; banning horribly inefficient incandescent light bulbs has almost single-handedly created a technological revolution in lighting technology, while saving consumers millions of pounds in the process; and just last week the introduction of a new A-G efficiency rating for car tyres promises to save fleet operators £500m a year.

So why are politicians so reluctant to talk about these undoubted success stories, and, more pertinently, why are they reluctant to accelerate the roll out of a low cost policy approach that is proven to work.

I am afraid our answer lies once again with our good old friend political cowardice.

There are only two arguments used against standard-based energy efficiency initiatives, neither of which are particularly compelling, but both of which are capable of defeating weak politicians.

Firstly, some businesses inevitably complain that demanding energy efficiency standards, environmental taxes, or product bans drive up costs as they are forced to invest in developing more efficient alternatives. But these concerns can be easily overcome by ensuring that standards are realistic and companies are given a long enough lead time to comply with them. The history of efficiency standards shows that policy makers almost inevitably end up not showing enough ambition, allowing technology providers to easily meet the new standards ahead of schedule, as has happened time and again with vehicle fuel efficiency and IT energy efficiency standards. Yes, standards can sometimes lead to an increase in upfront costs for products as companies develop new designs to save energy, but these costs come down over time and any increase in upfront costs is compensated for many times over by reduced running costs (a reality that allows clever financing options to overcome the problem of higher upfront costs).

Secondly, critics of standards-based policies argue against them on the ideological grounds that they impinge upon consumer freedom, particularly when they are used as a basis for banning or imposing higher taxes on inefficient products. This criticism is harder to dismiss when it is essentially the result of personal politics, but policy-makers who accept the urgent and compelling need to improve energy efficiency should be able to construct an argument against it. After all we ban or penalise all sorts of products that are deemed to not be in the public interest, ranging from drugs and guns to unsafe toys and sub-standard home improvements. If blatant energy inefficiency is not in the public interest, and it clearly is not, then we should have the confidence to gradually phase out inefficient products. You cannot sell a car that does not have an MOT or peddle electrical products that do not meet safety standards; you should not be allowed to sell countless products that are still guilty of appalling levels of energy inefficiency.

Sadly, introducing these policies is often harder said than done. Efforts to ban the incandescent light bulb took far longer than they should have done due in large part to outcry from a small number of traditionalists, while a simple and effective attempt to support the take up of the new Green Deal scheme by requiring households to agree to energy efficiency improvements when undertaking other renovations was scrapped at the merest whiff of media opposition to so-called "conservatory taxes".

And yet, wherever politicians have been brave enough to drive through these types of policies they have been remarkably successful and the consumer has been the main beneficiary.

Energy efficiency gains are absolutely critical to the wider success of the green economy and we simply cannot meet environmental targets without them. Incentives must play an important role in driving much-needed investment in energy efficiency, but cash-strapped governments would also be advised to show some political backbone and accelerate the roll out of standard-based policies that have been proven to work.

It is too late to get such policies into the UK's Energy Bill, and it would probably not be a particularly suitable place for them anyway, but efficiency-focused labelling schemes, procurement standards, taxes, and yes outright bans, should be at the heart of the next phase of the government's energy efficiency push.