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The champions of clean growth

15 October 2018 | By Pip Brooking

To mark the first Green Great Britain Week, we asked CBI members what they’re doing to save the planet and boost the economy

We have 12 years left to save the planet. Last week’s warning from the Intergovernmental Panel on Climate Change came with an urgent call to action – we need “rapid and far-reaching” shifts in the way we use land, energy, industry, buildings, transport and cities.

Green Great Britain Week – a government initiative designed to celebrate and drive “clean growth” – provides a timely opportunity to look at how UK firms are meeting the challenge.

But first, what is clean growth?

It’s shifting to a low carbon economy, driving new economic growth, creating businesses and jobs while cutting our emissions and reducing the impact on our natural environment.

Since 1990, the UK has reduced its emissions by over 40 per cent, while the economy has grown by over two thirds. The low carbon sector already supports almost 400,000 jobs. But the government has shown its intent to make the UK a champion of progress by linking clean growth to its Industrial Strategy.

That progress demands innovation, and it means everyone doing things differently.

This is about far more than switching generation from fossil fuels to renewables

Even energy firms are clear about one thing: they’ve broken the back of the “boring bit” of decarbonising power generation. Now discussions can centre on conversations that are far more relevant to the wider business world and members of the public alike.

“Five years ago we would have been talking about the power generation transition, and the government having to work with a relatively small number of companies to achieve change,” says Nick Park, Head of Policy at Centrica. “What we now see with the rise of different technologies and the general trend to decarbonisation and digitisation is a wider swathe of British businesses can get involved, to both lower carbon emissions and reduce their costs.” 

The shift is palpable in the business models of those energy companies. Centrica itself has shifted away from largescale electricity generation to focus on customer-facing services and managing supply. It now emits over 80 per cent less carbon for every pound of revenue than it did in 2010.

E.ON UK walked away from fossil fuel generation in 2016. More than 90 per cent of what it produced last year was from renewables. But it too is divesting its interests in wind to focus on the next frontiers of the “new energy world”.

Electric vehicles are the energy industry’s iPhone

“Energy is going to be in the hands of the people,” says E.ON’s Senior Manager, Public Affairs, Dan Meredith.

“And just as the iPhone made mobiles about more than just phone calls, the electric vehicle (EV) will be a catalyst for a lot of change and awareness,” he continues.

Last month we interviewed the UK bosses of Europcar and Zipcar about how they were catering to consumers’ growing interest in EVs. We also took a wider look at how business was contributing to the transition to zero emissions vehicles – including battery innovation and the installation of infrastructure.

But once consumers own an electric vehicle, they have a more tangible way of understanding their energy consumption. And they will demand greater control over their supply where they charge their car most often – in the home.

“Once they put in charging points, they start thinking about solar panels. Then they realise the amount of energy they’re wasting and want to put that right too,” he explains.

The home will be at the heart of the revolution

“The consumer will become part of the system, not just the user,” says Simon Anderson, founder of smart energy company GEO.

The Cambridgeshire firm was a pioneer of smart metering, breaking the traditional consumer attitude to energy as “out of sight, out of mind”. It then moved on to deliver smart thermostats, because “what people can see, they like to control”. 

But the company is now working on the next stage – an automated system that takes the hassle out of energy management, covering the whole home and including metering, solar generation, in-home battery storage and appliance control. A system GEO calls the ‘Hybrid Home’.

“It’s early days yet,” says Anderson. “We have to deal with the fact most homes are already built and hard to change, so we’re focusing on new builds.”

To drive the change, it has worked with TechUK and others in the industry to put together a business proposition for developers, both public and private. “This is not a solution for the rich,” he adds.

And when you look at the potential costs savings, there are compelling reasons why social housing may be the first port of call.

Working with local authorities to set the bar

Energy, business services and regeneration firm Engie UK is taking a similar approach. It launched a home energy division 18 months ago, and is heavily community focused.

“We’re running a number of innovative trials in social housing looking at a combination of solar panels and battery storage. We’re dipping our toe in community ownership models as well, enabling communities to invest in solar panels and such like,” says Jamie Quinn, the firm’s Corporate Responsibility and Environment Director.

In September, it also signed its first energy white label contract with Cheshire West and Chester Council, focusing on lowering bills for residents, targeting disengaged and vulnerable users and guaranteeing them renewable energy supply. For every new customer, the company will provide a contribution to a community fund, which could grant up to £600,000 over the next five years to local projects, including actions to reduce fuel poverty.

Taking more of a big picture view on energy efficiency within local authorities, E.ON has just announced a partnership with Astrosat and the European Space Agency to gather satellite images that identify where improvements are most needed. It means local authorities can better target their approaches to upgrading housing stock, optimising energy efficiency installations, improving air quality or easing congestion.

And in June, Centrica unveiled a new energy centre in St George’s Hospital in Tooting, South London which is guaranteed to save the hospital over £1m per year with no upfront cost. Featuring two combined heat and power units, four new boilers, a highly efficient chiller system and energy efficient lighting and controls, the project will also reduce the hospital’s annual carbon emissions by 20 per cent – the equivalent to taking 3,000 cars off the road.

“We’re looking to develop our offering to the public sector. The government has been progressive and has ambitious targets for carbon reduction, and hospitals, universities, the Ministry of Defence are all big energy users. It provides a real opportunity for cost saving,” says Centrica’s Park. “If the government leads by example, it will drive adoption.”

Business action

Firms are already waking up to the cost saving opportunities available from more in-depth discussions with their energy providers, rather than just negotiating on price each year. And heightened consumer awareness will only increase the business appetite to act on emissions.

Already more than 100 global businesses have signed up to The Climate Group’s RE100 campaign, publicly committing to only using 100% renewable electricity by a certain date.

Some have already achieved it, including Canary Wharf Group, Heathrow, M&S and Unilever (in Europe). British Land, BT, Burberry and Visa are within two years of their target.

Suffolk brewer Adnams hit the same milestone at the end of last year, something CEO Andy Wood suggested was “not a huge hurdle to get over” but a natural progression for a company committed to sustainability.

According to a Centrica report, 80 per cent of global businesses believe a quarter of their energy needs will be generated onsite by 2025 – and a lot of the technology that will be used in the consumer revolution is already being trialled in business. Being conservative, the company believes greater use of distributed energy (or local generation) could save industry £540m a year, and support 195,000 jobs, adding £13bn to the economy.

Intensive innovation

For energy intensive firms the pressure has long been on to innovate. You only have to ask Greet Van Eetvelde, Head of Energy and Innovation Policy at petrochemical giant INEOS who rattles off partnerships with industry and academia aimed at driving both product and process improvements.

Its Grangemouth site, for example, is working with Imperial College as part of the Elegancy project to try to help commercialise Carbon Capture and Storage for use in industry. In Hull, it has partnered with Ghent University in Belgium on a Horizon 2020 project on industrial symbiosis – a circular economy initiative looking what firms in different sectors can use from each other’s waste streams to drive energy and resource efficiency.

Across all its sites, it is working with the Polytechnic University in Lausanne, Switzerland, to use big data technology to define minimum energy requirements for its business units, giving them a goal to work towards – and to identify options to optimise the energy it uses. It is also collaborating with other industries, SMEs and universities to find the best way to recycle its plastics.

“We can do a lot on our own, but it doubles, triples the result if you do it with partners,” Van Eetvelde says. “By taking a lead and working with others, by constantly innovating, we can really make a difference.”

But she adds that when government needs industry to deliver its ambitions, the dialogue it has with businesses needs to be much more practical, so it really understands the barriers to progress. For example, legislation around waste needs to keep up with the developments in circular economy, she says.

Winds of change

Lindsay McQuade, Chief Executive at ScottishPower Renewables, points to the key role the UK government played in driving the adoption of wind power, creating an industry and helping prices come down.

The company’s Whitelee onshore windfarm is the biggest in the UK and is the same size as Glasgow. It takes advantage of Scotland’s natural resources – when it represents only 1 per cent of the landmass of Europe, but experiences 25 per cent of its wind.

“Renewables are now like a young adult trying to make themselves fit in to a grownup world,” she explains. “Prices coming down and so much innovation is going on to optimise capabilities.”

“But we’re at a pause right now, while we figure out how we take onshore wind to the next stage,” she continues – and that’s because these projects are not currently allowed to compete for government subsidies under its Contracts for Difference auctions.

“If it was afforded that opportunity to compete, I can pretty much guarantee that whatever the outcome, it will benefit the UK consumer because onshore wind is the cheapest form of newbuild, scalable generation. It will create jobs and it will spread economic prosperity right the way across the UK.”

“Scotland alone stands to gain 18,000 jobs,” she says, suggesting there are similar opportunities in Wales and Northern Ireland. “And the industry offers energy security and clean energy at a time when we’re about to use energy in more ways than we’ve ever done before.”

Keeping our feet to the fire

Looking back on the 10 years since the UK passed the Climate Change Act, Centrica’s Nick Park says we’re right to give ourselves a pat on the back for the leadership the country has taken, and the developments that have been achieved. “But it only gets harder from here,” he adds. “A lot of the changes we’ve made were the lower hanging fruit.”

New technology will help speed up the progress, he says – and with the scale of the challenge as it is, there’s a long-term economic benefit to be had if the UK government and industry continues to work together and holds tight to the ambition of being a leader and a pioneer in clean growth.

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