EV Revolution

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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

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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):

aboutus-infographic-2017-b

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.

 

 

Better Futures for London

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panorama-947410_1920On 12 June, London Mayor Sadiq Khan, launched a £1.6m clean technology incubator at London’s Tech Week.

The incubator, known as “Better Futures“, aims to provide funding and other technical and business support to over 100 technology start-ups in London which focus on clean technology innovation, low-carbon solutions and combatting the problem of climate change. It is hoped that the incubator will spur on the creation of a clean technology hub in London.

The incubator is being funded by the European Regional Development Fund and is a collaboration between the Mayor of London, Imperial College London, Imperial College London Consultants, OPDC (Old Oak and Park Royal Development Corporation) and Sustainable Bridges C.I.C.

Indeed, as part of the incubator package, some qualifying start-ups will be given the opportunity to pursue their research at Imperial College’s Centre for Cleantech Innovation.

In addition to launching the Better Futures incubator, the London Mayor also announced his desire to transform London in the world’s leading smart city. According to a recent report by IESE Centre for Globalisation and Strategy, London is already Europe’s leading smart city, and is second only to New York in the global rankings. The Mayor was quoted as saying: “The potential for cutting-edge technology to tackle a host of social, economic and environmental challenges is immeasurable.  From air pollution and climate change to housing and transport, new technologies and data science will be at the heart of the long-term solutions to urban challenges.”

Initiatives such as the incubator and the drive to make London the world’s leading smart city are crucial at this time as London begins to find a role for itself in a new, post-Brexit role. More of the same, please, Mr Khan!

 

Big Business going Green

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solar-energy-2157212_1920Big businesses often get lambasted for ignoring their impacts on the environment.

However, with climate change and energy efficiency issues currently high on the agenda, a growing number of big businesses are beginning to take impressive steps towards going “green” through the RE100 initiative, “a collaborative, global initiative of influential businesses committed to 100% renewable electricity, working to massively increase demand for – and delivery of – renewable energy“. So far the initiative has 96 signatories and these companies are coming up with some innovative solutions to meet the goal of 100% renewable electricity generation.

For example…

Last week, Goldman Sachs, the global investment bank, signed its first power purchase agreement with a subsidiary of NextEra Energy Resources, LLC which will result in the development of a 68 MW wind farm in Pennsylvania. The power purchased by Goldman Sachs pursuant to this agreement would cover its electricity needs in North America. This heralds a positive step towards Goldman Sachs’ aim of using 100% renewable energy for its global electricity needs. It also shows the bank’s desire to actively contribute to the creation of new clean energy generation. The project is expected to come online in 2019 and will result in the reduction of more than 200,000 tons of greenhouse gas emissions per annum once operational.

In March 2017, Anheuser-Busch InBev, the beer giant, made a commitment to acquire all of its purchased electricity from renewable sources by 2025, amounting to a shift of 6 tWh of electricity annually to renewable sources. The company estimates that this would cut its operational carbon footprint by 30%, which is the equivalent of taking 500,000 cars off the road. It intends to meet this commitment by investing in some renewable electricity, such as solar panels, onsite, and from a majority of direct power purchase agreements with renewable energy generators.

Since 2012, the LEGO Group has invested approximately US$ 890 million in offshore wind power and in May 2017, it met its target of acquiring 100% of its energy from renewable sources.

Finally, Wal-Mart Stores Inc., the global retailer, has made two commitments to be met by the end of 2020 in line with its aim of achieving 100% energy from renewable sources. Firstly, it seeks to procure 7 billion kWh of renewable energy globally by the end of 2020 and secondly, it is working towards reducing the energy per square foot intensity required to power its buildings by 20% compared to 2010. The company believes it can achieve these targets through long-term power purchase agreements which it has always found to be an effective way of shifting towards renewable power.

And something I was interested to learn is that Apple already generates 93% of its electricity worldwide from renewable sources, with operations in 23 countries being 100% run on renewable power. Great work!

 

“We’ll always have Paris”…continued

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IMG_2427aIn my original post about Trump’s withdrawal from the Paris Agreement, I discussed Michael Bloomberg’s efforts to replace the outgoing USA with a new signatory consisting of a coalition of American states, cities and companies. Positive steps have now been taken in this direction.

The coalition has issued an open letter entitled “We are still in“, pledging allegiance to the Paris Agreement. It now boasts over 1400 signatures.

During a G-7 environment meeting in Bologna, Italy earlier this week, Patricia Espinosa, executive secretary of the United Nations Framework Convention on Climate Change, announced that she will work towards enabling regions, cities and other sub-national players to join the Paris Agreement officially.  It is still unclear how this would work in practice, but the political will is there to ensure that even if America withdraws, the efforts and contributions being made by its states, cities and companies are not ignored.

In a bold move on 6 June, Hawaii passed legislation affirming its dedication to the Paris Agreement. It is the first state to officially confirm its position and hopefully, this will pave the way for other states to join.

The G-7 meeting concluded with the issue of a communique signed by all ministers, other than the US (whose representative only attended one session of the two day event). This communique reaffirmed international commitment to the Paris Agreement and also addressed other sustainability issues, including ocean pollution, energy efficiency and the need for increased funding to assist with reaching the sustainability goals.

 

A Call for Action for our Oceans

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loggerhead-turtle-123402_1920On 9 June, the first UN Ocean Conference came to an end. Deemed a resounding success by President of the UN General Assembly, Peter Thomson, the conference achieved the adoption of a 14 point Call for Action.

The Call for Action signatories affirmed their “strong commitment to conserve and sustainably use our oceans, seas and marine resources for sustainable development”. They recognised the importance the oceans play in maintaining our ecosystem, through the supply of oxygen and the absorption of carbon dioxide, and therefore, recommitted to the Paris Agreement climate change targets. They affirmed the need to “enhance the conservation and sustainable use of oceans and their resources by implementing international law as reflected in the UN Convention on the Law of the Sea“. They committed to “accelerate actions to prevent and significantly reduce marine pollution of all kinds” and to “implement long-term and robust strategies to reduce the use of plastics and microplastics”.

Equally impressively, the conference resulted in over 1300 voluntary commitments having been registered. These are commitments on the part of governments, NGOs, and other stakeholders to uphold the aims of Sustainable Development Goal 14.

Furthermore, the delegates from China, Thailand, Indonesia and the Philippines declared that they would begin tackling the problem of plastic waste from their countries ending up in the oceans. According to findings from the Helmholtz Centre in Leipzig, Germany, 75% of global plastic debris delivered by rivers to the sea comes from just 10 rivers, which are predominantly in Asia and reducing the plastic loads in these rivers by 50% would reduce global plastic inputs by 37%.

According to Andrew Hudson, head of the water and ocean governance progamme at the United Nations Development Programme, “This has been the biggest demonstration of interest in protecting our oceans – the biggest commitment to action. It’s really good, everybody is doing something,”.

 

 

Record-breaking Renewables

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italy-2098343_1920On 7 June 2017, the UK generated over 50% of its electricity from renewable energy for the first time ever. This follows on from the UK going a full 24 hours without any power generated from coal on 21 April 2017. These are landmark moments indeed! However, the UK still has a long way to go in renewables as it is lagging behind most international benchmarks. In 2015, only 8.2% of UK energy was generated from renewable sources. Furthermore, the UK now has plans to scrap its target of reaching 15% renewable energy generation by 2020 as part of Brexit.

The UK is not the only country that has recently been setting clean energy records. In early May 2017, Germany broke all records with renewable energy sources powering 85% of the country’s energy demands. On 13 May 2017, California generated just over 80% of its energy from renewable sources, with approximately 67% coming from solar power.

The EU is seeking to increase its power generation from renewables to 20% across all countries by 2020, as part of Europe 2020, the EU’s 10 year jobs and growth strategy. By 2015, it had reached 17% with several countries already meeting and exceeding the set thresholds. However, as the below diagram shows, there are still many countries that are falling behind.

Screen Shot 2017-06-13 at 15.48.30

Source: Eurostat

In 2015, the countries with the highest share of renewable energy generation in the EU were Sweden, with 53.9%; Finland, with 39.3%; Latvia, with 37.6%, Austria, with 33% and Denmark with 30.8%. The countries with the lowest share were Luxembourg, Malta, the Netherlands, Belgium and the UK.

However, with renewable energy costs steadily tumbling, we are likely to see an increasing share of energy generation coming from renewable sources as more renewable capacity is installed. Indeed, a recent report from the UN Environment Programme and Bloomberg New Energy Finance shows that 139 gigawatts of renewable capacity was built in 2016, an 8% increase on the year before, despite investment falling by 23%. The report also shows that the 2016 gigawatt figure was equivalent to 55% of all the generating capacity added globally in 2016, the highest proportion in any year to date. So for the moment, we are getting more renewable energy capacity for less money. Let’s hope this trend continues…but without investors losing appetite for renewables!

 

When small means big: bringing clean energy mainstream

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Screen Shot 2017-06-09 at 18.08.35

Yesterday, I attended a conference at the Cambridge Judge Business School on the topic of clean energy. The conference was entitled “When small means big: bringing clean energy mainstream”.

The conference was kicked off with opening remarks from Dr David Reiner and proceeded with a panel discussion. The panel consisted of Dan Barry, Global Head of Environmental Products, BP; Giovanni Terranova, Co-Founder and Managing Partner, Bluefield Partners; Peter Bance, CEO of Origami Energy; Martin Schoenberg, Energy Efficiency Finance Consultant, UN Environment Finance Initiative; and Pamela Taylor, Partner Enforcement and Innovation Link, Ofgem. The closing remarks were delivered by Ilian Iliev, CEO of EcoMachines Ventures.

The main focus of the discussions was what role clean energy would play in our electricity mix in the future and how to ensure that there is a supportive regulatory framework and sufficient finance to encourage the proliferation of clean energy supply.

A few key themes emerged from the discussions:

1) Unpredictability:

Every speaker alluded to the fact that we are notoriously bad at forecasting. For example, oil price fluctuations have, in the last few years, caught many off guard and no-one expected the cost of renewable energy to fall so dramatically. Another more specific example provided by Pamela Taylor was the projection made in 2012 for the uptake of solar photovoltaic in the UK. In 2012, it was estimated that it would take 18 years to reach 6GW of generation capacity. In reality, it only took four years to reach 10GW!

The good news is that, based on the panel’s experience, regulators (in the UK), companies and financiers are aware of this unpredictability, especially in relation to clean energy technology, and are responding.

Ofgem has launched a new initiative called the “Innovation Link” which advises new and alternative energy companies on their regulatory requirements and provides a service called a regulatory “sandbox” which enables new products and technologies to be trialled with fewer regulatory barriers. By March 2017, Ofgem had received 29 sandbox applications and over half related to local energy models. The intention behind the Innovation Link, and especially the regulatory sandbox, is to enable regulators and companies to work together to develop a stable and supportive regulatory environment for clean energy.

The BP Environmental Products team is responding to the unpredictability challenge by researching and helping invest in and develop a broad spectrum of new energy technologies, without, at this stage, committing to any one in particular. BP’s logic is that it is still unclear which technologies will be sufficiently stable and scalable to engender a systemic shift away from oil and gas.

2) Investment:

Giovanni Terranova of Bluefield Partners outlined the ideal investment framework for energy technology – a stable regulatory regime and technology which is both proven and scalable. This prompted me to ask, what about funding for early stage technologies where there is no established regulatory framework (Ofgem sandbox companies, for example)?

According to Giovanni, there is plenty of appetite from PE houses, VCs, hedge funds and family offices for investment in early stage clean energy technology. The incentive is obtaining first mover advantage in respect of a particular product. However, the downside is a high cost of capital. But, just like the solar and wind power industries, costs of capital will come down as the technology becomes more stable and better researched.

However, in his concluding remarks, Ilian Iliev lamented the lack of, especially, VC funding in clean energy. He even provided anecdotal evidence of his company playing down the clean energy aspects of certain products they invested in. At the same time, Ilian noted that project finance and corporate finance in clean energy was steadily rising. Perhaps therefore the model adopted by BP’s Environmental Products team is the most effective at providing funding for early stage clean energy technology.

3) Blockchain and other technology innovations in energy:

The use of blockchain technology in the energy sector was mentioned a number of times.

BP predicts that blockchain technology will enable real-time peer-to-peer energy transactions. Peter Bance of Origami noted that blockchain can be used to generate audit trails.

The panel also discussed potential future technologies that could assist the clean power industry, from an app which enables a consumer with solar panels on their roof to buy and sell energy from the main grid to the use of API technology to prevent excess demand failures.

The conference raised many questions about the future of clean energy but what was clear is that whatever form it takes, clean energy is already a substantial component of worldwide energy generation and its impact is only going to grow.

 

“How inappropriate to call this planet Earth when it is clearly Ocean.”*

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P1030434The oceans and seas of the world cover 2/3 of the surface area of our planet. They feed us, absorb carbon dioxide, emit half of the oxygen generated by plants and contain an abundance of natural resources, from hydrocarbons to minerals. However, they are being used and abused.

Over-fishing is depleting fish stocks and affecting the stability of the marine eco-system. Pollution, especially from plastic, is having a devastating effect on marine life and is economically detrimental to fisheries and tourism. With five trillion pieces of plastic currently floating in the oceans, in 2015, Globalwatch Institute estimated that the annual cost of ocean pollution from plastic equals approximately US$13 billion.* Plastic toxins are also finding their way into our food-chain, having been absorbed by fish and other sea-based foodstuff that we consume. Finally, growing CO2 emissions are raising the acidity of the oceans as increasing levels of carbon dioxide are absorbed by the oceans and converted into carbonic acid. This again affects marine life, bleaching coral reefs and dissolving the shells of crustaceans. The oceans also absorb much of the planet’s generated heat contributing to increasing ocean temperatures and rising sea-levels.

This is not sustainable. Steps need to be taken to arrest and reverse these trends.

Luckily, the international community is taking notice. In September 2016, John Kerry hosted the 2016 Our Ocean Conference in Washington, D.C., the third such conference. The conference raised US$5.24 billion in commitments to protect the oceans. The 27 May edition of the Economist ran a cover story about the health of our oceans. And this week the UN is hosting the first ever UN Ocean Conference in New York aimed at progressing Sustainable Development Goal 14 – “Life under Water”. It is expected that the conference will adopt a Call for Action to support the implementation of Sustainable Development Goal 14, to be shared on this blog once available.

However, intergovernmental commitments alone will not solve these issues. Action can and should be taken at corporate and individual level. Here are a few examples of innovations and initiatives helping our oceans:

Research Expedition Vessel: Kjell Inge Roekke, the tenth-richest man in Norway, with a net worth of over $2 billion and a background in fishing, industrial trawling and oil, recently announced his plans to contribute his great fortune to causes that will benefit society. His first initiative is a marine research vessel that will remove five tons of plastic from the ocean daily, melting it to ensure that it can do no harm. The ship will be managed by the WWF.

Global Fishing Watch: This is a joint SkyTruth, Oceana and Google platform which monitors global fishing activity by pooling together historical data from a satellite-based vessel monitoring system. It uses an algorithm to track fishing activity and is open for use by anyone with an internet connection. The aim of this initiative is to tackle over-fishing and help generate smart and effective fishing policies.

SkySails: One of a host of so-called “green shipping initiatives” aimed at reducing fuel consumption by cargo ships through innovative design. SkySails provides cargo ships with high altitude sails enabling them to capitalise on the stronger wind energy available at high altitudes and thereby, reducing their fuel use.

The Ocean Cleanup: The company has developed a plastic waste collection system which aims at removing half of plastic waste in the Great Pacific Garbage Patch in five years. Their system is a floating, rather than fixed, solution meaning it is more efficient at collecting waste and it is energy neutral. The system is currently being piloted but the creators are working at scaling up the system to deploy it worldwide by 2020.

If you know of any other great initiatives that deserve a mention, please send these in!

 

* quote from Clarke, Arthur C. 1917

“We’ll always have Paris”

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IMG_2427a…So goes the iconic phrase from the end of Casablanca. However, on 1 June 2017, President Donald Trump announced the US’ withdrawal from the widely respected Paris Agreement on climate change. What implications could this have for the agreement’s success? Unlike Ilsa and Rick from Casablanca, could it be that we will not always have Paris?

The Paris Agreement, adopted on 12 December 2015 and, as of today, ratified by 147 out of 197 signatories, is a commitment towards a sustainable, low carbon future. Its key aims are to curb global warming to 2 degrees Celsius above pre-industrial levels and to equip countries to deal with the consequences of climate change.

According to President Trump, the agreement is at odds with his “America First” mantra as complying with its terms could result in an apparent loss of 2.7 million US jobs. However, President Trump’s decision, somewhat counter-intuitively, may have actually galvanised support for the Paris Agreement around the world and given it an even greater impetus.

In Europe: Immediately on the back of President Trump’s announcement, Italy, Germany and France issued a joint statement reiterating these countries’ commitment to the Paris Agreement, stating that “We deem the momentum generated in Paris in December 2015 irreversible and we firmly believe that the Paris Agreement cannot be renegotiated, since it is a vital instrument for our planet, societies and economies“.

In America: Tesla’s Elon Musk and Walt Disney’s Bob Iger have announced their intentions to resign from White House advisory councils. And even more impressively, Michael Bloomberg is now spearheading the creation of a coalition of thirty American cities, three American states, and over 100 American companies which pledges to uphold America’s obligations under the Paris Agreement and even attempt to replace it as a signatory, once America fully withdraws. The coalition is currently in negotiations with the UN to be accepted as a signatory entity. This blog will follow the developments of this coalition.

In China: China also made it clear at the recent EU-China summit in Brussels that it considered President Trump’s actions to be an error. Although the summit was expected to produce a formal statement of cooperation on climate change between the EU and China, disagreements over trade intervened. Nevertheless, China has proven that it has an appetite for renewable energy with US$102.9 billion worth of investments into renewable energy in 2015* (however, falling to US$78.3 billion in 2016*) and with its Longyangxia Dam Solar Park becoming the world’s largest solar farm earlier this year. Here’s hoping therefore, that a formal cooperation statement between the EU and China will be forthcoming in the not too distant future…let’s watch this space.

In conclusion: President Trump’s withdrawal from the Paris Agreement does inevitably deal a blow to its ambitions. However, signatories and stakeholders around the world do not seem phased by his actions and indeed seem to have used his stance as a uniting counter-point. So yes at this stage, I think it is fair to conclude that we will always have Paris and in the words of Emmanuel Macron, there is substantial international commitment to “make the planet great again“.