Green bank is coalition’s biggest environmental test

Budget 2011: Green bank is coalition’s biggest environmental test

, environment correspondent,
Treasury building by night

The green investment bank will be unveiled in the 2011 budget after wrangling between the Treasury (above) and the Department of Energy and Climate Change over how it will operate. Photograph: Oli Scarff/Getty Images

The centrepiece of the coalition’s bid to be “the greenest government ever” will be unveiled in George Osborne’s budget on Wednesday: a green investment bank, primed to invest in low-carbon infrastructure such as renewable energy and the development of new, clean technologies.

The bank has been a long time in gestation because of an almighty row within government between green enthusiasts such as the climate secretary, Chris Huhne, and the Treasury over what powers the bank should have. The result of that tug of war will be arguably the most important green measure announced by the chancellor in his speech at 12.30pm.

The idea of a green bank has been enthusiastically received by green campaigners and the low-carbon technology industry. Penny Shepherd, the chief executive of the UK Sustainable Investment and Finance Association (UKSIFA), said: “Today, the UK is widely recognised as a global leader in green financial services. There is a real risk that our international competitiveness in this growing market will be seriously damaged if we are not seen to recognise the urgency of financing our own low-carbon transition.” A green investment bank would be a key part of that financing, she said.

John Sauven, the executive director of Greenpeace, called the bank “the glue that would hold together the coalition’s entire green programme”.

“The keystone of the government’s green investment policy must be a strong green investment bank,” added Guy Shrubsole, of the Public Interest Research Centre (PIRC).

But campaigners argue that the bank will be introduced in a form that could jeopardise some of its aims. Despite being called a bank, it will lack many of the powers that allow banks to operate – for instance, the chancellor is expected to confirm today that it will not have powers to borrow or raise money until 2015, and it will not be able to issue financial instruments, such as Isas and bonds. The £1bn initial government funding for the bank is less than environmentalists called for, and it is not yet clear what sorts of project the bank will be allowed to invest in. Would it be able to support nuclear power plants, for instance?

According to the PIRC, the UK devoted £12.6bn to green investment in 2009-10, which was less than 1% of GDP and less than half of the sum it is estimated will be needed in annual investment to reform the UK’s energy infrastructure and meet greenhouse gas emissions targets. (It is also, according to the PIRC, less than the amount the UK spends annually on cosmetics and perfume.) The organisation said the bank would need to be funded with £4-6bn, to be effective.

But the green investment bank is likely to be capitalised with only £1bn from the government to begin with, and a further £1bn to £2bn could come from public sector asset sales.

Government finance in the form of a green bank is needed to kickstart the UK’s low-carbon economy, according to financial experts, because private sector banks are unwilling to take risks on new technologies and some large infrastructure projects. The backing of a government-funded bank could help to attract private sector investment, as it would remove some of the risk associated with early-stage investments.

Philip Jones, investment manager at the London Pension Fund Authority, said: “The green investment bank should be a green investment insurance operation. Unless you can insure projects, a lot of them are going to wither on the vine.”

It is unclear whether the bank will be able to act as an insurer of projects in this way. Many of the finer details of how the bank will operate will not be finalised until May.

The bank has been mired in controversy since its inception, because of conflicting ideas within government of what its role should be. According to the original plans laid out by Bob Wigley, the former Merrill Lynch banker and chairman of Yell who was called in by George Osborne to lead the design, the bank should be able to raise equity, borrow money, issue bonds and sell consumers savings products that would allow them to participate in the growing green economy.

But many of those plans have been whittled away. The Treasury is known to be unwilling to allow the bank too much autonomy, fearful of creating a beast it cannot control, and is insistent that the bank should remain on the government’s balance sheet – an insistence that means if the bank were to borrow, that could swell the public sector deficit, though only on paper. The Treasury is firmly against swelling the deficit on any grounds, even if the increase is purely in accounting terms rather than real.

After furious rows between the Treasury and other departments, the compromise reached is that the bank will not be allowed to borrow within the term of this five-year parliament, but will gain such powers from 2015.

That restriction is viewed as catastrophic by some. Joan Walley, Labour MP and chair of the environmental audit committee, which published a report critical of the government’s plans to curtail the role of the bank, said: “It would be a tragedy if the green investment bank were not set up in the way that is needed to deliver the investment needed.”

Ed Matthew, the director of Transform UK, which has campaigned for a green bank, said: “The power to borrow is what gives the green investment bank the ability to leverage in the private investment required to spark low-carbon growth and decarbonise our energy system. If they clip the wings of the green bank so it can’t fly, where is the growth going to come from? Are they going to magic it out of thin air?”

He said: “It seems extraordinary that in terms of delivering a ‘budget for growth’ the government can’t even do something everyone wants. We are in clean-tech race with the rest of the world and the Treasury seems determined to lose.”

Tim Yeo, a Tory MP and former minister, was more sanguine. “The delay is certainly very disappointing, but allowing it to borrow from 2015 is better than nothing.”

Another power the bank will lack, the Guardian has revealed, is the ability to issue “green Isas”. These would be individual savings accounts, which let people save a certain amount each year tax-free, which would be invested in green stocks and shares or green projects.

Finance experts and green campaigners have been disappointed that green Isas – which were first floated by Osborne in 2008 – will no longer be part of the package. Shepherd, of UKSIF, said: “What’s important here is the principle – if the government chooses not to make these available to retail investors, it will have lost the opportunity to build wider support for the low-carbon transition.”

“This is very short sighted,” said Matthew Spencer, of the Green Alliance thinktank. “[The government] has not engaged the public in the mission to rejuvenate the UK’s infrastructure, and a green Isa would have been one way to raise enthusiasm as well as new funds.”

To cut carbon emissions, tackle traffic snarls

04:45 AM Dec 11, 2012

by Dennis Posadas

If we look at a lot of Asian cities like Manila and Bangkok, we find an extraordinary amount of gridlock especially during the peak hours going to and from work in the business districts.

Despite the preponderance of mass transit systems in many countries, there are still a large number of cars and trucks that enter and leave our cities every day to do their activities.

All of these vehicles of course burn fossil fuels and release greenhouse gases, but we rarely stop and think of traffic avoidance as a carbon mitigation scheme. Most of our attention is focused on clean energy vis-a-vis coal plants and other fossil fuel energy sources.

While it is important to avoid building more coal plants (or at least slow it down), one cheap and smart way to do carbon mitigation is to simply work on the traffic problem, coupled with fuel efficiency efforts.

A programme to encourage engine tune-ups and maintenance; banning certain cars from the road depending on their plate number (for that day); encouraging car pools; and other easily implementable solutions can reap good carbon reduction rewards, especially if you consider that one hour spent in traffic can easily burn one litre of fuel. This solution, of course, should be coupled with mass transit solutions and other modern urban planning tools.

The United States Environmental Protection Agency estimates carbon dioxide output from a standard coal plant for every hour it is run at roughly 2,249 lbs per one million watts of electricity generated (or one megawatt). This translates to just over one metric ton of CO2 per hour.

If we compare this with the CO2 output from vehicles – assuming an average of 2.5kg per litre of fuel – we find that burning roughly 400 litres of fuel is equivalent to each megawatt that a coal plant that runs for an hour generates.

Now consider this: An entire city paralysed in traffic gridlock may exceed 40,000 litres of petrol burned every hour.

The CO2 generated is the equivalent of what a 100-megawatt coal plant running for an hour produces.

So the next time someone talks about cutting carbon, one might suggest that they also look at traffic avoidance in our cities as a good carbon mitigation strategy.

Dennis Posadas is an Asia-based fellow of the Climate Institute Center for Environmental Leadership Training and a technical consultant on clean energy matters. He is the author of Jump Start: A Technopreneurship Fable. His new business fable on clean energy will be published in 2013.


Copyright 2012 MediaCorp Pte Ltd | All Rights Reserved

Singapore’s chance, in an era of business as unusual, by Malcolm Preston (04:45 AM Dec 11, 2012)

Solar Panels on South-east Asia’s first Zero Energy Building in Singapore,
which produces enough energy to run itself. By 2015, the clean energy
industry could contribute S$1.7 billion to the country’s GDP.


The current economic conditions have been described by PricewaterhouseCoopers’ (PwC) UK economic analysts as the “new normal”. It’s a period of high uncertainty, subdued growth and volatile commodity prices. Put climate change in the mix and it is business as unusual.

If the findings of this year’s Carbon Disclosure Project’s (CDP) Global 500 report are anything to go by, we had better get used to it. Even if we took a positive outlook on economic growth, the implications of this year’s report are that while growth might be good news for the economic environment, it is less encouraging for the physical one.

Fewer than half of responding companies in this year’s report show a decline in their emissions solely attributable to emission reductions activities. The economic slowdown led to staff reductions, closure of plants, offices and shops, reductions in output, manufacturing and business travel, not to mention corporate and consumer spending.

So, while the recession has been good for carbon emissions, it is the right result for the wrong reasons.

Companies are making short-term operational or efficiency investments to reduce emissions but are holding back on longer-term capital investments. Underlying technology, investment or strategy issues have yet to be addressed wholesale.

Any economic recovery will be matched by a bounce-back in emissions as well and with it we are seeing the goal of limiting climate change to 2°C slipping further out of reach.

In fact, as discussed in our Low Carbon Economy Index, we believe governments and business should start building 4°C and even 6°C scenarios into their forward planning.


In fairness to business, companies are responding as best they can in the current legislative and regulatory environment.

In their responses to CDP, 49 per cent of companies state that regulation is an important driver of corporate action. And regulatory uncertainty is a barrier to action. CEOs are rational people. They need investment-grade policies, at a national level, to get backing for the kind of game-changing low-carbon investments needed.

This is where Singapore can play an important role in the global sustainability and climate change agenda.

With the right policies and incentives, the upheaval thrown up by the current uncertain economic climate and regulatory environment might allow Singapore to fast-track its development of clean and renewable technologies in the areas of energy, food and water, by attracting even cleaner tech firms to set up their operations here.

The Singapore Government has projected that by 2015, the clean energy industry could contribute S$1.7 billion to the nation’s gross domestic product and create 7,000 jobs across a broad range of areas, including solar power, fuel cells, wind power, energy efficiency and carbon services.

They have done a remarkable job of initiating a programme for attracting renewable energy and clean tech companies to base their operations here. But to achieve their ambition, they will need to continue this programme with an integrated mix of public and private initiatives including R&D support; policies to allow development and testing of more new technologies in Singapore; and financial incentives, to name a few.

With the global population expected to hit eight billion by 2030, I expect the demand for expertise in clean tech and energy efficiency, particularly as climate and energy security issues escalate, to rise exponentially as nations struggle to provide their citizens with the basic needs of energy, water, sanitation and food. The issues extend well beyond clean and renewable energy.

Singapore, compared to many other nations, has already set out its stall to be a leader in these sustainability issues. The opportunity that lies ahead for Singapore is to attract and nurture industries that will deliver high-value and specialised jobs across the range of clean-tech industries well into the foreseeable future. And in so doing, enable our global society to transform to a world of business as unusual.

Malcolm Preston is the Global Head and UK leader of sustainability and climate change at PricewaterhouseCoopers. He was in Singapore as one of the speakers at the recent Bloomberg Businessweek Global Green Summit.


Copyright 2012 MediaCorp Pte Ltd | All Rights Reserved

Wise up, it’s a simple human equation by Devadas Krishnadas

04:45 AM Dec 05, 2012
The polar ice packs are shrinking at rates which exceed scientific projections made only a decade ago. Temperatures across the globe are increasing. The United States Environmental Protection Agency states that its best-case projection is for a 1.1 °C rise by the end of the century.

Total global carbon emissions can only increase as the planetary population grows and a greater share of this mass of people become urbanised.

The United Nations Population Division projects that global urbanisation, at 50 per cent today, will reach 70 per cent by mid-century.

(Picture: The Maldives may be uninhabitable by mid-century due to rising sea levels.)

So there are a few immutable facts to this story.

One, climate change is real. Two, climate change is accelerating. Three, one of the key contributing factors to climate change, namely carbon emissions, will increase with population growth and urbanisation rates. Four, climate change is a planetary-system-wide phenomenon. And five, we do not have a planetary-system-wide response. Consequently, we, as a planet, are on a collision course with a very bad scenario.


Why are we continuing on this path if its outcome is self-evident? It seems to be that there are five major conceptual roadblocks to progress.

First is the false and futile debate over the veracity of climate change. The evidence that the climate is changing is irrefutable.

Thus the debate centres on whether climate change is man-induced or natural. This is somewhat akin to deciding if the train rushing towards one has a malicious driver at the helm or is a runaway engine. Either way, one is going to get run over.

Even those who believe that climate change is natural acknowledge that Man’s activities do contribute partly to the phenomenon.

Thus, the logic should be that since climate change is a threat and we cannot do anything to mitigate the natural part of it, we should focus on what we can do something about – Man’s activities.

Second, climate change is systemic on a planetary scale. It can be difficult for most people to grasp change on such a scale when it is challenging enough to cope with change on a human scale. Nonetheless, if there is one thing all peoples should be able to agree upon, it should be the thing that represents an existential threat to us all. If only it were so easy.

Third, even while climate change is accelerating when measured in geographic time, it is still happening slowly in human time. In other words, most people do not feel the effects of climate change within their lifetime viscerally enough to take action.

Of course there are those that do – in Greenland, for instance, the agricultural season has extended by three weeks over the past half century, while the Maldives will potentially be uninhabitable by mid-century due to rising sea levels.


Fourth, the mental model held by political leaders and policymakers is that economic growth and climate sensitivity are at worst mutually exclusive and at best sequential.

Particularly in the case of developing economies, where the remnants of the world’s forested areas, unspoiled continental rivers and ground based minerals are located, there is tragedy of present extraction for local economic growth prioritised over the future consequences on global climate health.

Fifth, the model of consumption-driven economic behaviour that has prevailed since the Industrial Revolution has meant that economic progress is negatively correlated with climate health. This is due to the extraction of natural resources, the negative externalities of industrial production and power generation and wastefulness of urban societies all in service of the limitless consumerism of the aspiring urbanite.


What can be done? Conceptual roadblocks must be undone with conceptual levers, scale of challenge matched with scale of response.

First, the need for climate sensitivity should be acknowledged at the planetary level. The United Nations should prioritise the issue, seek the commitment of states and coordinate the actions of international agencies to bring into focus both global attention and resources.

As it has done with human rights, peacemaking and disaster relief, the UN needs to put climate sensitivity on the agenda for global action.

Second, with the future global population increasingly concentrated in cities, there is a need to ensure that urbanisation is climate sensitive.

C40 – an organisation currently chaired by New York City Mayor Michael Bloomberg and championed by former US President Bill Clinton, which brings together Mayors of major cities – is doing outstanding work in this direction. In 2012, Singapore signed on as an observer city.

We can do more.

We have set managing better with urban intensification as one of our National Innovation goals. We can build on this commitment to look at climate-sensitive measures for dense urbanities such as ours. In the same way that we have become leaders in water conservation, we can and should – as the most advanced city in our region – be leaders in urban climate sensitivity.


Third, there must be a concerted effort by the private sector, policymakers and thought leaders to find practical ways to make economic growth and climate sensitivity mutually inclusive and concurrent.

This is not an impossible goal, merely hitherto a neglected one. The human mind, particularly when motivated by sufficient passion, can accomplish anything it sets to – that much our history has proven. Emergent economy leaders should not fold their hands and wait for solutions but actively join the process of discovery of this new path of development.

Fourth, rather than try to rely exclusively on bottom-up measures and moral suasion, much wider and entrenched progress can be made if existing frameworks of discipline on state behaviour can factor in performance on climate sensitivity.

Mr Achim Steiner, the UN Under-Secretary-General and Executive Director of the UN Environment Office together with Ms Susan Burns of the Global Footprint Network, have argued for sovereign risk ratings to take into consideration state performance on climate sensitivity.

This would be a powerful way to normalise the need to be climate-sensitive as nothing concentrates the minds of the political leader, policymaker and private market actor as much as cost of capital and reputational risk.


Fifth, President of Uruguay Jose Mujira has passionately and eloquently argued for a rethink of the consumption-driven model of economic progress. Many have riposted that he is being idealistic and not practical.

In fact, when we consider the certainty of climate change motored by the externalities of such an economic model, we should treat him as the ultimate pragmatist for looking facts in the face and calling its name loudly.

Climate change is a collective phenomenon. It must be met by an acknowledgement of collective responsibility. No one and no place will be excluded from the experience of climate change. Equally then, dealing with it is an obligation from which no one and no place should be excluded.

Our future depends on the fulfilment of this human equation so absurdly simple and self-evident, which will call upon each of us to find the moral mettle to force ourselves, our governments and our private corporations to prioritise future benefits over present gains.

Devadas Krishnadas is Director of Future-Moves, a foresight consultancy based in Singapore. He is a Fulbright Scholar.

CO2 emissions hit record high last year

NEW YORK – Global emissions of carbon dioxide were at a record high last year and are likely to take a similar jump in this year, scientists have reported, in the latest indication that efforts to limit such emissions are failing.

Emissions continue to grow so rapidly that an international goal of limiting the ultimate warming of the planet to 2°C, established three years ago, is on the verge of becoming unattainable, said researchers affiliated with the Global Carbon Project.

Dr Josep Canadell, a scientist in Australia who leads that tracking programme, said that salvaging the goal, if it can be done at all, “requires an immediate, large and sustained global mitigation effort”.

Yet nations around the world, despite a formal treaty pledging to limit warming, have shown little appetite for the kinds of controls required to accomplish those stated aims.

Delegates from nearly 200 nations are meeting in Doha, Qatar, for the latest round of talks under the treaty, the United Nations Framework Convention on Climate Change.

However, little progress is expected, especially on a protocol that is supposed to be concluded in 2015 and take effect in 2020.

Ms Christiana Figueres, Executive Secretary of the climate convention, said that while the global negotiations were necessary, they were not sufficient to tackle the problem “until enough domestic legislation and action are in place”.

Global emissions jumped 3 per cent last year and are expected to jump another 2.6 per cent this year, researchers reported in two papers released by scientific journals last Sunday.

The level of carbon dioxide has increased about 41 per cent since the beginning of the Industrial Revolution.

Scientists say further increases in carbon dioxide are likely to have a profound effect on the climate, leading to higher sea levels and greater coastal flooding, more intense weather disasters and an extreme acidification of the ocean. The earliest effects are already being seen, experts believe, but they are projected to worsen.

The New York Times