What’s in a name?

pinwheel-2222471_1920A lot it would seem, if you’re a large oil and gas company repositioning yourself as a low-carbon committed energy company. So, on 15 March, Statoil announced that it would be changing its name to Equinor, a name that signals equality and a return to its Norwegian roots. The proposed name change is now subject to a shareholder vote at the company’s AGM on 15 May but given the support of the Norwegian government, which is a majority shareholder, it is unlikely that there will be any dissent. The name change, which is rumoured to cost approximately US$32 million, will remove “oil” from the company’s name and fits nicely with its low carbon strategy unveiled last year. Will the new name embolden the company to accelerate its transition to a sustainable energy mix ahead of its current 2030 milestone? Time will tell.

Statoil’s name change comes after Orsted (previously Dong Energy) underwent a similar name transformation late last year. Orsted is a Danish energy company that started its existence with a heavy dependence on coal. It began its green transformation about a decade ago, phasing out coal consumption by 73% in 2017 and targeting a full withdrawal from coal by 2023. The company also divested all of its oil and gas assets in 2017 and is focussing on being a global leader in offshore wind. It currently holds a 25% market share in the industry, powering 9.5 million people. Its aim is to power 30 million people by 2025. The name Orsted is a homage to Hans Christian Orsted, a Danish scientist who discovered electromagnetism.

Full scale name changes are not the only ways the big oil and gas companies are trying to prove their commitment to the energy transition. Companies, such as Shell, are rebranding themselves as full service “energy” companies (not oil and gas companies). Indeed Shell is currently being pressed by an activist shareholder group to make a radical shift away from fossil fuels. This shareholder group, called Follow This, contends that Shell’s current commitment to reduce its carbon footprint by 50% by 2050 is not sufficient to meet Paris Agreement thresholds. A similar resolution brought by Follow This last year was rejected by 94% of Shell’s shareholders. However, with climate change, the Paris Agreement and global warming now regularly in the headlines, perhaps this  year the resolution will find more traction, especially following this week’s publication by Shell of the radical Sky Scenarios report. The report focusses on technically feasibly but challenging steps that need to be taken over the next 50 years to ensure the Paris Agreement targets are met. The seven key steps outlined in the report are:

“1. A change in consumer mindset means that people preferentially choose low-carbon, high-efficiency options to meet their energy service needs.

2. A step-change in the efficiency of energy use leads to gains above historical trends.

3. Carbon-pricing mechanisms are adopted by governments globally over the 2020s, leading to a meaningful cost of CO 2 embedded within consumer goods and services.

4. The rate of electrification of final energy more than triples, with global electricity generation reaching a level nearly five times today’s level.

5. New energy sources grow up to fifty-fold, with primary energy from renewables eclipsing fossil fuels in the 2050s.

6. Some 10,000 large carbon capture and storage facilities are built, compared to fewer than 50 in operation in 2020.

7. Net-zero deforestation is achieved. In addition, an area the size of Brazil being reforested offers the possibility of limiting warming to 1.5°C, the ultimate ambition of the Paris Agreement.”

Source: Sky Scenarios report, Shell

The increased activity among the large oil and gas companies to embrace transition is commendable. Whether they are doing this out of genuine concerns for the future of the planet or because investors are now rapidly starting to pull out of oil and gas stocks is debatable. Either way, though, provided the net effect is that we witness a sustainable realignment of the energy mix, all such news is good news.

 

 

Plastic un-fantastic

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So far in the UK, 2018 has been dominated by the topic of plastic.

In December 2017, China announced that it would cease importing most types of plastic waste for recycling, a move that has unnerved both the government and businesses in the UK. Previously, plastic was an “out of sight, out of mind” problem for the UK. But now with the Chinese ban in imports, the UK will have to address its plastic waste problem urgently as it currently does not have the means to recycle or deal with the amount of plastic waste it generates every year. According to Greenpeace, the UK has sent over 2.7 million tonnes of plastic waste to China and Hong Kong since 2012, amounting to 2/3 of the UK’s total export of plastic waste.

In response to the ban, Theresa May, the UK Prime Minister, yesterday unveiled a 25 year environmental plan which aims to tackle the UK’s plastic problem. The plan aims to eradicate all avoidable plastic waste in the UK by 2042. The key provisions are:

  • introduction of “plastic-free” aisles in supermarkets;
  • extension of 5p carrier bag charge to all retailers in England;
  • potential introduction of taxes on single-use, plastic takeaway containers;
  • establishment of government fund for plastics innovation; and
  • commitment to use UK aid to help developing nations tackle plastic waste and pollution.

Although the announcement was widely welcomed, environmental groups were not impressed that the promises are wooly and have no legal force. Many also baulked at the 25-year timeframe, criticising the lack of urgent action. There is the cynical view that the announcement was just a clever bit of electioneering to attract more young voters for whom the environment is an important issue. However, the plastic problem is a salient one and we can therefore only hope that each of these promises will be put into action sooner rather than later.

One positive piece of plastic-related news that has come out of the UK in the last few days is the coming into force of the plastic microbeads ban on 9 January. Initially the ban only covers manufacturing but as of July this year, it will also be extended to the sale of products with microbeads. Thousands of tonnes of plastic microbeads end up in the oceans each year, harming the flora and fauna and eventually ending up in the food that we eat. The UK is the first country to introduce a wholesale, robust ban and it is hoped that more will follow suit. Ireland is already looking to introduce its own ban in late 2018.

However, government “stick” is not the only way to achieve reductions in plastic waste. Companies should proactively review their plastic consumption and outputs and seek ways to improve efficiencies and reduce waste. For example, certain coffee shops in the UK already offer a 25p discount to people who bring in their own reusable coffee mugs or thermoses. However, this is poorly advertised. Starbucks is also planning to pilot a 5p surcharge on plastic cups in some London stores in February. These are positive steps forward. But are they enough?

Finally, on the back of the China ban, we may seem the emergence of a whole new local recycling industry. For example, Group Machiels, a waste management company, is planning to convert waste from landfill sites into energy and building materials using a technology called plasma. Eventually, the company aims to turn emptied landfill sites into local parks. Unfortunately, local support for such extensive landfill site excavations is currently low but this does sound like an innovative way to tackle one side of the problem.

One thing is for sure, plastic waste around the world is a catastrophic problem for our environment and ultimately for our health. The problem needs to be addressed both at source with a significant reduction in the generation of plastic products and through effective recycling of used plastics. The UK government’s 25 year plan is a positive step in the right direction, but it needs to be accelerated. Businesses and consumer attitudes also need to change. Plastic reduction must start today.

 

 

 

Sustain a Future’s 2017 Review

design-2711676_19202017 was a year when sustainability, climate change and emissions reductions came to the fore on both private and public agendas. And so as we tumble towards 2018, I would like to do a run-down of the year’s developments that are helping to sustain a future.

Paris Agreement

One of the biggest developments early in 2017 was President Trump’s decision to pull out of the Paris Agreement (see blog). However, this only served to galvanise worldwide support for the agreement and as of today, 172 out of 197 countries have ratified it. The President’s actions also gave birth to the “We Are Still In” movement of over 2700 US companies, cities and states, together representing $6.2 trillion of the US economy, coming together to pledge allegiance to the Paris Agreement goals and ensure that America abides by its commitments, even when it withdraws from the agreement. The US withdrawal has also opened the door for Emmanuel Macron to become a leading voice in the fight against climate change, as evidenced at the One Planet Summit this December.

Electric vehicles

2017 also saw a reassessment of forecasts relating to electric vehicles. In a report published in July, Bloomberg New Energy Finance stated that it estimates that by 2040, 54% of new car sales and 33% of the global car fleet will be electric (see blog), a much more bullish forecast than it had issued just a year before. Added to this, a number of countries and car companies announced the ban or phase out of petrol-only vehicles. For example, Volvo announced that it would be going all-electric with every car in its range to have an electric train by 2019 and the UK and France announced a ban on the sale of new petrol and diesel cars from 2040.

Renewable power generation

Records were set in renewable energy generation in 2017. In the UK, low-carbon energy sources made up 52% of the energy mix throughout the year, making 2017 the “greenest” year on record for the UK. The country also succeeded in having a full 24 hours of coal-free power generation in May 2017 (see blog). Furthermore, in October 2017, wind power provided nearly a quarter of all energy generation in Europe as a whole. These records have been assisted by the continued falling costs of solar and wind power technology and renewed investment in renewable energy infrastructure. For example, earlier this year the world’s first floating wind farm came into operation offshore Scotland, operated by Statoil.

Business initiatives 

On the business side, the RE100 group of companies committed to 100% renewable power (see blog) grew again this year to 116 members including Google, Apple, Unilever,  Walmart, ABInv Bev…to name but a few! These huge, multinational companies have each set the goal of obtaining 100% of their electricity from renewable sources within the next decade or so. Traditional oil and gas companies have also embarked on the energy transition journey. Shell now commits $1 billion annually to investments in clean energy. BP is committed to a lower-carbon future with a move towards greater investments in gas and carbon capture and storage technology. Both companies are also members of the Oil and Gas Climate Initiative (see blog), which includes the world’s biggest oil and gas companies. These companies have committed US$1 billion of funding to be invested over the next decade in innovative technologies and start-ups which propose solutions to substantially reducing greenhouse gas emissions.

Plastic pollution

2017 also witnessed the first UN Ocean Conference, which highlighted the plight of our oceans due to growing plastic pollution and climate change (see blog). The Ocean Conference raised $5.24 billion in commitments to protect the oceans and created a Call for Action which affirmed the signatories’ “strong commitment to conserve and sustainably use our oceans, seas and marine resources for sustainable development”.  Greater awareness of the dangers of plastic pollution have also resulted in individual action to fight plastic pollution, including the Ocean Cleanup whose plastic waste collection system aims to remove half of plastic waste in the Great Pacific Garbage Patch in five years; Adidas teaming up with Parley to develop trainers out of plastic and Plastic Odyssey which has developed a boat that can be powered by plastic.

A look to the future…

So what are the predictions for 2018? I think that the key themes will be:

  • a broader conversation about peak oil, but due to falling demand rather than supply;
  • the role of gas in the future energy mix;
  • the use of blockchain to facilitate peer to peer energy transactions;
  • the rise of electric vehicle alternatives, such as the hydrogen motor; and
  • more innovative uses of existing technologies – such as the solar panelled motorway in China that intends to charge cars as they drive using wireless technology.

It’s been an eventful year and so for now, I wish you all a very happy and prosperous New Year!

COP23 Roundup

downloadLast week, the latest UN Climate Change Conference was held in Bonn, Germany. It was the first such conference to take place since the US’s withdrawal from the Paris Agreement and with Syria becoming a signatory during the conference, the US is now the only country in the world not to be a party to the agreement.

The conference again brought the topic of climate change to the centre of the international political arena and amid the general calls for action and greater urgency, concrete commitments were made. I will discuss some of the key take-aways here.

1. Launch of Powering Past Coal Alliance 

The UK and Canada spearheaded the launch of a new initiative aimed at phasing out traditional coal power. Although there is no firm timeframe commitment, the alliance’s declaration states that traditional coal power needs to be phased out by no later than 2030 in the OECD and EU28, and no later than 2050 in the rest of the world.

The alliance was joined by more than 20 entities including Denmark, Finland, Italy, New Zealand, Ethiopia, Mexico, the Marshall Islands and the US states of Washington and Oregon. Michael Bloomberg also pledged $50m to expanding his anti-coal US campaign to Europe.

However, notable abstainees from the pledge included the US, China, India and Germany.

2. Launch of Ocean Pathway Initiative

With Fiji holding the rotating presidency at COP23, it was expected that there would be an initiative focussing on the oceans and climate change. As a Pacific Small Island Developing State (SIDS), Fiji is particularly vulnerable to the destructive effects of climate change on the oceans, through rising sea levels to overheating.

The Ocean Pathway initiative has reaffirmed the Call for Action issued at the UN Ocean Conference earlier this year and seeks funding for ocean health and maintenance of ecosystems from UN climate change funding initiatives. The initiative has also launched the Oceans Pathway Partnership to link existing ocean activities and promote cooperation.

3. Financing climate action

During the conference, a number of significant funding commitments were announced, including:

  • Adaptation Fund: This fund, established under the Kyoto Protocol, finances projects and programmes that help vulnerable communities in developing countries adapt to climate change. To date, it has committed US$462 million in 73 countries. This year, it was officially committed to serve under the Paris Agreement framework and country contributions have exceeds the 2017 target with contributions of EUR 50 million from Germany and EUR 7 million from Italy.
  • Norway and Unilever fund: US$400 million fund established for public and private investment in more resilient socioeconomic development. The fund will invest in business models that combine investments in high productivity agriculture, smallholder inclusion and forest protection.
  • Amazon rainforest fund: Germany and the UK have committed US$ 153 million to fight climate change and deforestation in the Amazon rainforest.
  • Initiative 20×20 investment: World Resources Institute announced a US$ 2.1 billion investment to restore degraded lands in Latin America and the Caribbean.

4. Launch of Below50 Initiative

The World Business Council for Sustainable Development (WBCSD) launched the below50 initiative, initially in North America, South America and Australia, to create greater demand and more markets for sustainable fuels, i.e. fuels that produce at least 50% less CO2 emissions than conventional fossil fuels. The initiative aims to bring together the entire value-chain for sustainable fuels and scale up their deployment.

Finally, despite US’ withdrawal from the Paris Agreement, Michael Bloomberg’s “We’re Still In” coalition of US cities, states and companies, was out in force at COP23, showing the world that large parts of America are still fully committed to the targets set out in the Paris Agreement.

And as the conference delegates begin to reflect on the week’s achievements, the biggest hope is that the commitments are kept and promises are delivered. With record levels of funding now being directed towards tackling climate change, there really is no excuse not to act.

 

 

 

Coming off the grid

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This year, we have watched in utter horror as hurricanes Harvey, Irma, Jose and Maria thrashed the Caribbean, the Gulf of Mexico and the southern United States. This hurricane season has had the highest number of storms since 2010 and the most accumulated cyclone energy since 2005. Damage from the hurricanes is now estimated to stand at US$186.7 billion!

But amid all of this destruction, flickers of hope emerge…

Late last week we learnt that Elon Musk, of Tesla, has been in conversation with the governor of Puerto Rico offering for Tesla to rebuild the island’s power grid with batteries and solar power. For Tesla, in addition to coming to the aid of an island in dire need of assistance, this provides a perfect platform to demonstrate its technological prowess.

The technology Tesla plans to use has already been deployed on a number of other smaller islands and according to Musk, there are no scalability issues. For example, the island of Ta’u in American Samoa is powered by a solar grid which can store enough electricity to power the entire island for three days without sun.

A Tesla-built Puerto Rico grid sounds like a brilliant option for the island and, with a promised 100 day turnaround, it couldn’t come quickly enough!

The rise of local renewable mini-grids or standalone grids has been a growing trend since 2016, spurred by falling solar technology costs, technological advances in battery storage capacity and the continued spread of innovative customer payment solutions. Standalone grids provide much-needed electrification to areas that are poorly accessible or that are far from established electric grid infrastructure. According to the IEA World Economic Outlook 2016, there are 1.185 billion people without access to electricity in the developing world, the majority of them in Africa. Mini-grids and standalone grids would be an energy efficient and affordable (from the consumer perspective) solution to this problem.

However, as with any disruptive technology, in order to scale up, it requires a regulatory regime that is fit for purpose and funding. Most regulatory regimes do not cater for the off-grid market and so it continues to operate in somewhat of a grey area. A more encompassing regulatory regime would pave the way for more market entrants. On the funding side, there have been some breakthroughs. Indeed, just yesterday M-Kopa Solar, a leader in the pay-as-you-go energy provision market, announced that it had secured commercial debt funding of US$80 million, proving that the off-grid electricity market can be financial viable. However, such announcements remain an exception, rather than the norm.

Perhaps Tesla’s involvement will spark a renewed interest in the off-grid market and will encourage greater investment…here’s hoping!

ChangeNOW!

image1 (4)This weekend your blogger went along to the inaugural ChangeNow! conference in Paris. The conference describes itself as one of the first international events on the topic of “innovations for good”. It focussed on the UN Sustainability Goals in the fields of energy, circular economy, healthcare, education, sustainable cities and tech for good.

A couple of key take-aways from the conference:

Energy

On the topic of energy, we heard from a variety of speakers, including Jerome Schmitt, Senior VP Innovation and Energy Efficiency at TOTAL Gas and Power, Dr Michael Dorsey, full member at the Club of Rome, global energy expert and co-founder and principal at Around the Corner Capital, and energy industry disruptors Meteoswift, Echy and Zephyr Solar. A number of key themes emerged.

Firstly, Jerome Schmitt discussed the important role that traditional oil and gas companies should play in the energy transition. He acknowledged that companies such as TOTAL are not safe from renewable energy and clean tech distruptors. However, the cost and technology race in solar and wind power over the last few years has actually resulted in many start-up renewable energy companies going bankrupt. Schmitt believes that oil and gas companies should partner with renewable energy companies and provide the necessary funding to enable them to scale-up. For example, since 2011, TOTAL has owned a majority stake in Sunpower, a solar energy company.

Secondly, both Jerome Schmitt and Michael Dorsey discussed the trend of decentralisation in the energy supply industry with the rise of microgrids and the use of blockchain technology to permit peer-to-peer energy supply. However, Dr Dorsey contended that large utility companies may drag down such innovative progress by preventing third parties from supplying existing grids or by lobbying governments to introduce restrictive regulations.

Thirdly, one other way that the energy industry may evolve is through the development of innovative non-electricity reliant solutions. For example, Echy has developed technology to harness sunlight to light-up buildings with natural daylight. The technology results in electricity savings of approximately 68% as Echy lighting does not use electricity. Many of the speakers predicted that more and more such non-electricity reliant solutions will come to the fore in the next 5-10 years.

Tech for good

The theme of tech for good was prevalent throughout the entire conference. Ynse de Boer, Managing Director at Accenture, delivered the introductory talk on this topic.

De Boer proposed four ways to ensure that technology is used as a force for good. Firstly, companies using technological solutions must ensure that their customers are protected, supported and educated about how their data and information are used. Secondly, businesses and governments need to anticipate that the jobs of the future will not be the same as the jobs of today but instead of using technology to eradicate jobs, it should be used to complement them, improving productivity. Thirdly, technology should be directed towards delivering innovative products and services and used to solve largescale social issues. Finally, technology should be used to create transparent and inclusive value chains, facilitated through the use of mobile and digital technology.

According to de Boer, governments, business and not-for-profit organisations all need to work together to ensure that technology is used efficiently and always as a force for good.

Cleaning the oceans

The session on ocean clean-up introduced three different companies that are working on cleaning up our oceans – TheSeaCleaners, Adidas and Plastic Odyssey.

TheSeaCleaners work on removing rubbish from seas, harbours and oceans. Since 2002, their team has removed over 5.1 million litres of rubbish and they are continuing to gain momentum.

Adidas has recently teamed up with Parley to develop a range of trainers made from discarded plastic. According to Adidas, each pair of these trainers prevents approximately 11 plastic bottles from entering the oceans.

Finally, Plastic Odyssey are working to create innovative, small scale, local solutions to plastic waste. They are developing a boat that will spend three years travelling between Africa, Asia and South America, fuelled exclusively by plastic collected from the oceans and converted into fuel. The boat will stop off at numerous locations to work with local communities to understand their recycling needs and develop unique solutions.

The conference also included sessions on the future of agriculture, healthcare and the creation of sustainable cities.

It was heartening to see such enthusiasm and creative buzz for positive impact projects and issues. Governments and business can no longer ignore the need for purposeful investment and regulatory structures that are favourable to the social entrepreneur. The trend has started and it won’t be long before it really takes off! Are you ready?

Clean Britannia

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It’s been a busy week for the British clean energy industry.

On Monday, the business secretary, Greg Clark, announced the launch of phase one of a £246 million four-year Government investment in revolutionising the UK energy grid through the development and improvement of battery technology and storage. Phase one includes the creation of a £45 million “Battery Institute” competition to establish a centre for research into making battery technology more affordable and accessible. One of the longterm goals is the creation of giant battery facilities around the National Grid which would store excess wind and solar energy to be deployed at times of peak energy demand.

The investment, known as the “Faraday Challenge”, is part of the Government’s Industrial Strategy. It is split into three streams of research, innovation and scale-up and is being seen as a “game-changer” for the UK, enabling the UK to be a world leader in clean energy and transportation.

Responding to the announcement, Professor Philip Nelson, Chief Executive of the Engineering and Physical Sciences Research Council (EPSRC), said: “Batteries will form a cornerstone of a low carbon economy, whether in cars, aircraft, consumer electronics, district or grid storage. To deliver the UK’s low carbon economy we must consolidate and grow our capabilities in novel battery technology.”

Another aspect of the announcement is the introduction of new rules over the next year to enable households with solar panels to generate and store their own electricity with the help of new battery technology and to sell this electricity back to the National Grid. The rules would move away from the traditional tariff model which solar panel owners currently have to pay to import electricity from or export electricity to the National Grid. The new rules would also reduce energy costs for people and businesses that agree to use less electricity during peak times. Overall, the intention is to provide for greater flexibility in the electricity system. The Government and Energy regulator Ofgem estimate that consumers could save between £17 billion and £40 billion by 2050.

These developments will be facilitated by the roll-out of smart meters and the development and installation of smart gadgets and appliances, enabling a washing machine to be turned on by the internet during a period of high energy supply or a freezer being turned off for a few minutes to regulate demand. Tech companies, such as Google and Amazon, are already eyeing up opportunities in this new market to act as energy suppliers on the back of Ofgem agreeing to relax licencing and data sharing rules. This would give such companies direct control over appliances in a customer’s home, which has raised some serious concerns over privacy and security.

In other developments, earlier this week, the world’s first floating wind farm began trials off the coast of Scotland. Using revolutionary technology, this trial if successful, would enable wind energy to be generated in waters that are too deep for bottom-standing turbines, opening a new frontier for wind energy. Although currently much more expensive that traditional wind turbines, producers are hopeful that the cost of floating turbines will fall, just as it has for traditional turbines.

 

Finally, the UK has made a bold announcement to ban the sale of new petrol and diesel cars from 2040, following on from a similar announcement made by France earlier this month. Perhaps somewhat fortuitously, this announcement was followed by BMW announcing that it would start developing a fully electric Mini car at its plant in Oxford, UK.

After years of ignoring clean energy and environmental issues, it looks like the UK Government is finally starting to sit up and take notice. This week’s developments are an excellent step forward. However, much more investment and innovation is still needed for the UK to meet its 2030 Agenda commitments.

 

 

G20 2017 Climate and Energy Action Plan

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Among the many topics discussed at this year’s G20 Summit, was climate and energy. The summit culminated in the issue of a joint declaration summarising the agreements reached and the plans adopted by the G20 leaders. With respect to climate and energy, the declaration was decidedly split between the “G19” and the US, acknowledging the US’ desire to pull out of the Paris Agreement and its continued support for the use of fossil fuels, albeit “more cleanly and efficiently”.

As part of the summit, the G20 leaders also adopted the G20 Hamburg Climate and Energy Action Plan for Growth. The Action Plan  identifies six key areas of development, which include developing strategies for long-term low greenhouse gas emissions; creating a reliable and secure framework for the transition of the energy sector, which involves the promotion of energy efficiency and the scaling up of renewable and other sustainable sources of energy; realising access to modern and sustainable energy services for all; and aligning finance flows.

Although only the last-mentioned area of development specifically refers to finance, a recurring theme throughout the whole Action Plan is the need to secure more private and public investment. And this seems to be one of the biggest hurdles to meeting the Paris Agreement targets and to transitioning to clean energy.

The Action Plan identifies that significant levels of investment, both private and public, will be required to modernise infrastructure in line with the Action Plan’s goals and to continue the scaling up of renewable and sustainable energy. In addition to achieving climate and energy goals, such investment is likely to also generate local growth, employment and help with poverty eradication. Addressing several Sustainable Development Goals at the same time!

The Action Plan specifically notes the role played to date by Multilateral Development Banks (MDBs) in mobilising “climate finance” and calls on them to further enhance their involvement. In 2015, the following MDBs, the African Development Bank, the Asian Development Bank, the European Bank of Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank and the World Bank Group, issued a joint statement at COP21 committing to work together to “substantially increase climate investments from public and private sectors to support”. This existing commitment is applauded but the Action Plan further encourages the MDBs to cooperate and coordinate efforts to finance ambitious energy and climate adaptation and mitigation projects and new technologies, and to identify how the private finance sector can assist with meeting the 2030 Agenda objectives and the Paris Agreement goals.

The investment question has also be considered in detail in the UN Green Finance Report published on 14 July 2017 by the UN Environment Programme (UNEP). The report identifies that the G20 in particular has made significant progress in mobilising private and public capital for climate and clean energy developments and initiatives. An example, is the recent joint commitment by eleven global banks to develop tools for assessing climate-related financial risks and opportunities; and to make more disclosures in relation to climate investments, making the sector more transparent. The banks are ANZ, Barclays, Bradesco, Citi, Itaú, National Australia Bank, Royal Bank of Canada, Santander, Standard Chartered, TD Bank Group, and UBS.

Commenting on the new Green Finance Report, the Executive Director of UNEP, Erik Solheim said: “This new research […] shows encouraging progress in this regard. From a record number of new green finance measures to ambitious plans for green finance hubs, we are seeing the smart money move to green financing.” He further added: “The challenge now is to rapidly increase capital flows to investments that will support our sustainable development objectives and create commercially viable green businesses for decades to come.”

The challenge has been set and the rewards are great economically, environmentally and socially. So let’s hope the investment starts to flow in the right direction!

EV Revolution

electric-charge-2301604_1920Electric vehicles (EV) are a hot topic right now.

Tesla has announced that its new Model 3 cars will hit the market by the end of July 2017 – the first Tesla car to be delivered to customers on time. The Model 3 is aimed at broadening Tesla’s customer base. With a starting price of US$35,000, it is much more affordable than the more upmarket Model S and Model X. Production will start at 1,500 cars in September and is targeted to reach 20,000 by December this year.

Yesterday, Volvo announced that it would be going all-electric with every car in its range to have an electric train by 2019. It is the first car manufacturer to make this transition. Volvo’s CEO, Håkan Samuelsson, has said that: “This announcement marks the end of the solely combustion engine-powered car.”

Furthermore, many other car manufacturers either have or are working on creating an electric or hybrid model. These days consumers can choose from the original hybrid, the Nissan Prius or upgrade to the Nissan LEAF, the Renault ZOE or the BMW i3, the Volkswagen e-Golf or the Volkswagen e-up. And of course, we mustn’t forget the upscale Tesla Model S and Model X. Jaguar is also currently working on an electric vehicle to be launched in 2018, the I-Pace, with an expected range of 300 miles on one charge.

All this activity has unsurprisingly led Bloomberg New Energy Finance (BNEF) to reassess their EV forecasts from last year. BNEF’s Electric Vehicle Outlook 2017, published yesterday, draws the following key conclusions:

  • by 2040, 54% of new car sales and 33% of the global car fleet will be electric;
  • falling battery prices are key to the growth of this market and battery electric vehicles will outpace plug-in hybrid vehicles;
  • lithium-ion battery demand from EVs will grow from 21GWh in 2016 to 1,300GWh in 2030;
  • EV sales to 2025 will remain relatively low, but there will be an inflection point in adoption between 2025 and 2030; and
  • electric vehicles will become price competitive on an unsubsidised basis beginning in 2025.

This EV revolution will be great for the environment by removing polluting cars off the roads. And the race is now on between Tesla and Chinese battery companies, such as  Contemporary Amperex Technology Ltd (CATL), to produce enough batteries to power this revolution. One GWh could power 40,000 electric cars each travelling 100km. Chinese battery companies are currently targeting the production of 121 GWh of batteries by 2020, far in excess of Tesla’s gigafactory target of 35 GWh when it reaches full capacity next year. However, Tesla does not like to be in second position, so we may seem some developments on this front soon!

BF(O)G – big friendly oil & gas

oil-rig-2191711_1920I have always believed that a clean energy revolution can only be achieved with support and buy-in from the big oil and gas companies. It seems that many such companies are now starting to agree.

A few years ago, 10 major oil and gas companies, between them responsible for over 20% of world oil and gas production, came together to form the Oil and Gas Climate Initiative (OGCI), an “initiative which aims to show sector leadership in the response to climate change“. The ten companies are BP, Total, Statoil, CNPC, eni, Pemex, Reliance Industries, Saudi Aramco and Shell.

The initiative’s mission is to work together to achieve notable reductions in greenhouse gas emissions from the oil and gas industry, while still meeting world energy demand. At present, the OGCI is focussing its efforts on three working groups – Low Emissions Roadmap, Carbon Capture, Utilisation and Storage, and Managing Methane Emissions.

It has also prepared an interesting matrix which maps actions identified by the IEA as having the potential to reduce greenhouse gas emissions sufficiently by 2040 to remain on track for a 2°C scenario against the oil and gas industry’s ability to influence such actions. This matrix is reproduced below (source: OGCI):

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In November 2016, the companies behind the OGCI finally put their money where their mouth is and set up OGCI Climate Investments, a partnership with a committed US$1 billion of funding to be invested over the next decade in innovative technologies and start-ups which propose solutions to substantially reducing greenhouse gas emissions. The partnership will operate out of Imperial College London’s White City Campus, bringing it into direct contact with the Better Futures initiative recently launched by the Mayor of London (see my blog on this). OGCI Climate Investments appointed its first CEO, Dr. Pratima Rangarajan, in May 2017 which hopefully means that it will now come into full operational mode.

I hope that both the initiative and the investment partnership will actively push ahead with their stated aims and that we will begin to see the fruits of their labour in the not too distant future. I also hope that other oil and gas companies will join their cause.