Paul Turner, head of Sustainable Development, Lloyds Banking Group:
There are a number of forces at play which leads me to believe 2011 will be a good year for the ’green economy’ and hopefully a significant one too.
First of all, a combination of rapid industrialisation and urbanisation, consumption growth and severe weather events have put commodity prices under pressure and that will mean that businesses will look hard at how operational efficiencies can be made. Because energy is one of those commodities, I think there will be increasing focus on energy efficiency
Secondly, as we slowly emerge from the economic downturn businesses will do what businesses are really good at, which is to innovate, look for competitive advantage and target new markets. The competitive landscape for 'green and clean tech’ has shown real resilience during the global downturn and as we start to recover I think we will see new markets, like the electric vehicle market, begin to expand.
Thirdly, policy and regulation
. In the UK, the CRC, which for many businesses now stands for 'costly, really costly’, is driving efficiency and the Feed-in Tariff is driving innovation
. The Green Deal and the Green Investment Bank will also see further development this year. All of these bode well for the 'green’ economy.
But, there remain a number of hurdles. Embedding sustainability in business in a way that creates real and lasting value needs a strategic approach and this will continue to be hard for many businesses that are still struggling to recover from the recession. Whilst there is still plenty of low hanging fruit, especially in energy efficiency, investment
is needed and understandably businesses are reluctant to invest when the economic outlook is still uncertain. And, let’s not forget the all important consumer whose priorities have necessarily changed and 'green’ is not as high as it once was.
Dax Lovegrove, head of Business & Industry, WWF:
We will see greater low carbon commitments from the private sector in 2011 building on a real turning point in 2010. Last year, all kinds of multinationals started to look beyond their lesser direct carbon emissions at the greater impacts up and downstream of operations
and we saw the likes of Unilever, Wal-Mart and Tesco set bold ambitions for reducing significant emissions from supply chains and customers at the point of using products. We also expect to see more firms using their lobbying influence more positively with many last year encouraging the EU to exercise leadership and move to a target of cutting emissions by 30 per cent by 2020.
There is also more attention being given to other ecological threats. The increasing push on REDD to protect forests, the first round of business reporting on water use through the Carbon Disclosure Project, and the greater value placed on ecosystems services and biodiversity
through the TEEB initiative indicates that business is starting to recognise the natural world as an essential part of their asset base.
2011 will see greater collaboration among businesses – already emerging through the Consumer Goods Forum – and greater innovation such as that seen in the case studies we are collecting at www.wwf.org.uk/innovation
to counter natural resource depletion.
The challenge this year will be to ensure action is setting us on the right trajectory to prevent runaway climate change and ecological collapse and to secure economic greening at the required pace. Redefining long-term success will be another feature of 2011.
Jane Burston, founder Carbon Retirement:
I think 2011 will be a critical year for the low carbon economy. The right conditions have been created to enable businesses to fundamentally rethink their approach. The Carbon Reduction Commitment
is in full swing and attaches an imminent and real cost to carbon; the energy bill proposes fundemental market reform; and the floor price on carbon will see taxes on fossil fuels increase and subsidies decrease. The price of carbon is heading higher, barriers to low carbon development are being removed, and an new era of consicousness among business leaders is emerging.
2010 saw early movers making a different kind of sustainability pledge: one that encompasses not just issues of direct responsibility but a full lifecycle approach. Unilever is a prime example; its ambitious target to halve GHG emissions by 2020 includes both its supply chain and customer use of products. Regulation, public interest and a new style of leadership that is confident to make strategies based on values as well as value will make 2011 the year where other businesses follow suit – widening the gap between those that will thrive in the challenging circumstances we're due to face and those that will lose out.
Matthew Mellen, Campaign manager, Mayday Network:
2011 is shaping up to be a huge year for low carbon business. 2010 finished on a high note with world leaders returning to the UNFCCC international treaty framework. This gives us all a strong indication that there will be a global treaty and so national legislation limiting carbon emissions is likely to follow. This is a powerful incentive for companies not taking action to get cracking and will give a huge boost to the leading companies that have already begun cutting their emissions and changing their business models in preparation for the low carbon economy.
The price of oil and gas can only go in one direction. With costs going up, smart companies that use energy and resources efficiently will always be at an advantage. Consumer pressure is continuing to build and together these factors represent a 'perfect storm’, which will make business-as-usual increasingly difficult and incentivise radical change.
New ways of doing business, environmental products and services and a return to local manufacturing can all mean new jobs for the UK’s workforce.
The Government’s Green Deal should support this and so, more than ever, the shift to the low carbon economy can mean new jobs and sustainable growth.
Tom Delay, chief executive of the Carbon Trust:
2011 could be a pivotal year for green growth in the UK. We are at a turning point where business is moving from a debate about whether or not the green economy offers opportunity, to an all-out race for competitive advantage in the growing markets for green products and services.
For the Carbon Trust this means that while our mission remains the same – to accelerate the low carbon economy – the nature of our advice to large and small businesses
is evolving. Whereas we previously focused on energy efficiency and cost savings, we are increasingly working with companies to help them understand and exploit the business opportunities the green economy offers them.
James Blake. associate director, RSK Group:
2011 looks to be a mixed year overall for the UK's low carbon economy. The tightened CO2 emissions standards of the 2010 Building
Regulations update will promote low carbon design in new development, whilst Feed-In Tariffs and the forthcoming Renewable Heat Incentive will provide enhanced return on investment for a range of low and zero carbon energy technologies. Implications for the low carbon economy from the Coalition's Localism Bill remain uncertain – although pioneering local authorities and communities will have greater powers to pursue low carbon development, revocation of the regional spatial strategies (and their positively-worded policies on sustainable and low carbon development) may be a backwards step in other administrative areas. High and increasing electricity and fuel prices are likely to stimulate energy and carbon efficiency within a range of business sectors. Voluntary carbon reporting is likely to increase with the business community in preparation of potential mandatory reporting by 2012.
The 2010 budget brought about a number of changes and uncertainties for the CRC Energy Efficiency scheme, the most significant being the removal of recycling payments thus creating a de facto 'carbon tax'. The uncertainties will most likely be resolved in 2011 following further review by Government. Some large businesses have initially reacted by bringing forward capital expenditure projects related to energy efficiency.
2011 will also see the final clarification of the future status of a number of environmental 'quangos'. This may result in a reduction in the availability of certain resources to business.
Jonathan Shopley, managing director, The CarbonNeutral Company:
Definitely expect a significant year ahead. We have emerged from 2010 with UN authority re-established at Cancun; Climategate firmly behind us; US engaged through California’s AB32 cap and trade legislation, and China stirring US and European competitive instincts with its lead as the world’s largest manufacturer of solar capacity.
Don’t expect a massive up-tick in capital deployed just yet – regulatory confusion still abounds and business and investors need more certainty before putting recession constrained cash to work in the low carbon world. However, companies like GE, Google, HSBC, SunTech, Virgin and Wal-Mart are leading the way, and the 'smart followers’ will heed the latest thinking from Michael Porter at Harvard and put social and environmental issues firmly at the centre of their strategies for growth.
Paul King, chief executive, UK Green Building Council:
For businesses in the built environment, 2011 should be the year of no more excuses. Last year, we got a new Government, and spent time eyeing each other up. And then we had the IGT (Innovation and Growth Team) ruminating on the barriers to innovation and a low carbon construction industry. All good stuff, but also excellent excuses for not actually doing very much.
Yes, there’s still plenty of important policies to engage Government on – the Green Deal, the Carbon Reduction Commitment, localism. The list goes on. But take a step back and we actually know how to do this stuff. Be lean, mean and green – smarter design, improved efficiency of kit, and sourcing energy from renewable
enables us to halve emissions (or more) from almost every building in the country.
We’re calling for a halving of CO2 in the built environment in the next 10 years. Let’s make 2011 the year to really make some progress on shedding those carbon calories!
Tim Pollard, head of Sustainability, Wolseley:
2011 will be a very significant year for the sustainable built environment. On a micro level the impact of incentives programmes for renewable technologies has been well demonstrated by the results for the first six months of the Feed-in Tariff, with over 10,000 applications being received and record levels of enquiries being made. The Renewable Heat Incentive is proposed for the middle part of the year. Depending on the level of support, this incentive is likely to significantly accelerate demand for the major renewable heating products, such as heatpumps, solar thermal and biomass.
As product demand increases, the need for more qualified installers will also come into focus. We need to help the existing professionals to gain the necessary skills and accreditations to respond to demand. Without this effort we may find a serious bottleneck to progress.
We expect water efficiency
to greatly increase in prominence with the advent of extensive metering and changes in regulation.
On a macro level, oil costs are likely to challenge every business, and individual, both directly and indirectly. There will be widespread economic impacts as a consequence of increasing distribution and manufacturing costs.
Jon Lee, Business Development manager, Ecology Morgages:
In terms of our housing stock, we face a huge challenge to improve the efficiency of our built environment to save money and carbon, and to shift the balance from a reliance on fossil fuels to greater deployment of renewables in the home and in our commercial environment. The advent of the Feed-in Tariff scheme is encouraging take up, and we expect this will be complemented by the forthcoming Renewable Heat Incentive.
More widely, the UK faces severe challenges if we are to manage our wider energy needs in a more sustainable manner and build new, affordable housing stock to the sustainable levels demanded. It is a fear that the cuts in commitments to public spending on large scale renewables and sustainable housing via instruments such as the proposed Green Investment Bank could lead to a huge missed opportunity to radically alter the course of our economy for the better. Inertia in these crucial areas will not only run the risk of UK plc missing the chance to be one of the world's leaders in the green economy, but also severely hamper our statutory commitments on carbon reduction.
Cathy Debenham, founder, YouGen:
2011 will be a significant year for the low carbon economy. Heating is a major contributor to the UK’s carbon emissions, so the Renewable Heat Incentive has the potential to make really significant changes to the way we heat our homes and businesses. However, I think that there are real challenges of communication and understanding to overcome if it is to be a success.
First, I think people need good quality, independent advice that focuses on how to reduce energy needs in buildings as well as the best heat source. There also have to be affordable finance schemes available – otherwise the scheme will only benefit those with the capital to invest. So, there’s lots of opportunity for the green business sector to grow, but how fast it grows will depend on how attitudes change and whether people trust the new technologies.
Rhian Kelly, CBI head of Climate Change:
Following some unexpected good news in Cancun we can start 2011 on a cautiously optimistic note.
In addition, this year we will begin to see the Government’s plans for the green economy taking shape in more detail. There are some good ideas that deservedly have cross-party consensus, but there is still much to get right.
Our Climate Change Policy Tracker looks at how Government policy is helping or hindering our carbon reduction goals and the latest, published at Christmas, warns how Government changes to the planning system could delay investment needed in our low carbon energy infrastructure.
Despite the Government’s great green ambition, particularly electricity market reform and the Green Deal, climate change doesn’t fit into one neat policy box. It affects all areas of our lives, so it must be considered in all parts of Government. That is why it is vital that changes to land use planning procedures and legislation such as the Localism Bill do not damage the ambition of decarbonising our energy supply.
Merlin Hyman, chief executive, Regen SW:
The dominant political issue of 2011 will be where the new jobs are coming from to replace the hundreds of thousands lost in the downturn and cuts. Regen’s research shows there has already been rapid growth in renewable energy jobs and, both at national and local level, the low carbon economy will be seen as key to developing the high value, sustainable employment we desperately need. Whether the promise of renewable energy to create these jobs is fulfilled will depend heavily on the impact of the Coalition Government’s reshaping of both economic development and renewable energy policy.
The introduction of the Renewable Heat Incentive, electricity market reform and the Localism Bill will all have a major impact on the market for renewable energy companies. The support available for companies to make the most of the opportunities emerging will be revamped by the replacement of Regional Development Agencies with Local Enterprise Partnerships. Regen will be working hard to influence the new policies and to encourage Local Enterprise Partnerships to put the low carbon economy as their top priority. By the end of 2011, we should have a clear idea of whether these policies are helping put us in the lead in renewable energy and the broader low carbon economy – or falling behind in the international race to dominate these markets.
Francis Wood, Policy advisor, Federation of Small Businesses:
The Federation of Small Businesses hopes that 2011 will prove to be the year that the low carbon economy comes to the fore of Government plans for growth. The low carbon economy can no longer be seen as an optional add-on, but as a key element in ensuring economic growth for the UK in the coming decades.
In order to release the potential of the green economy we need to see Government removing the barriers that hinder low carbon growth and stop firms from going green. The FSB wants to see targeted action from Government to help businesses green their supply chains, allow them to access public support for research and development
to make their existing products more sustainable and, above all, create an environment to give investors the confidence they need to invest in the low carbon economy. Only then will we be able to unlock the true potential of the green economy.
Mike Childs, head of climate change, Friends of the Earth:
2011 is full of opportunities for the Government to create a thriving low carbon economy and a safe climate – but it won’t happen without a real push from people, NGOs and forward-thinking businesses.
The Government will introduce a new energy law in 2011. We’re campaigning for it to heat our homes, not the planet. A strong bill will create new business opportunities, thousands of jobs and will save householders money.
This year will also see the Government deciding how to recharge the UK's energy market. There’s widespread acceptance that it’s currently failing to tackle carbon emissions, create a secure energy supply and allow new companies to enter the big-business-dominated market.
As the world experiences some of the devastating impacts of a changing climate with an increase in extreme weather events, December will see global leaders deciding whether to act to avert a dangerous level of temperature rise. We’ll be pushing for them to create a concrete agreement on global carbon reductions. Time is running out and the longer we delay emissions reductions, the harder it’ll be to maintain a stable climate.
Ben Caldecott, head of UK & EU Policy, Climate Change Capital:
This year will be a profoundly important year for green businesses and our global transition to a low carbon economy. During the downturn our relatively new sector has been disproportionately affected by a lack of credit availability, as well as low fossil fuel prices and low carbon prices, which together made green investments less attractive (although they still outperformed most traditional sectors). The pace of the economic recovery, how the sovereign debt crisis plays out, and whether fossil fuel prices continue to rise, will all play important roles in determining how good sectoral growth in 2011 is likely to be.
The year will be important for other reasons too. In the UK, for example, the new Green Investment Bank will be established and the Government will proceed with the most ambitious reforms to the electricity market since market liberalisation in the 1980s. These could lay the foundations for delivering the scale and pace of investment required to tackle climate change, at lower overall costs to taxpayers and consumers.
Other innovations in 2011 could include finally creating the structures (possibly with the initial and temporary help of Government) for new sources of capital, from both institutional and retail investors, to enter the low carbon sector in meaningful amounts. Green infrastructure bonds, to refinance built and operating low carbon infrastructure, could be issued at sufficient scale to be a good match for the deep pools of low cost capital held by institutional investors, while 'green’ ISAs or green retail bonds could be created to tap into retail savers looking for new, ethical ways to make good returns. Without accessing these currently under-utilised sources of capital, realising our low carbon future will be both less likely and more expensive.
Sarah Chambers, lead energy and sustainability analyst, Datamonitor:
Most commentators will have modest expectations for the low carbon economy and green business in 2011. As the global economy makes small steps towards recovering from the impact of the 'Great Recession’ there is still great uncertainty as to how that will affect investment levelsin renewable energy. The rising prices of oil and coal does mean that renewable energy sources become more commercially viable and attractive but a number of governments across Europe, notably Spain and Germany, are removing Feed-in Tariff provisions as they have become 'over-subscribed’ and significantly more costly than expected.
In emerging markets, investment in renewables has been increasing and taking over traditional markets in Europe and North America where they may fall behind if the trend continues, even though stimulus spending in emerging markets is now largely coming to an end.
A lack of global policy clarity still pervades as nations were unable to conclude a new binding agreement, to replace the Kyoto Protocol, in Cancun at the end of 2010 and are unlikely to come to an agreement in Durban in 2011.
Caution is still the watchword for investors and green businesses as economic, policy and technology development issues remain largely unresolved in 2011.
Dr Gordon Edge, director of Policy at RenewableUK:
The year ahead is expected to be pivotal in terms of UK energy policy. The Government has plans to introduce far-reaching legislation that will mark one of the most critical stages in the development of the renewable energy sector. The Coalition’s promise to be the "greenest government ever" is likely to be seriously tested in 2011.
The forthcoming consultation on electricity market reform aimed at promoting investment in all forms of low carbon generation will have a significant impact on the renewables sector. A move away from Renewables Obligation Certificates
(ROCs) in favour of one incentive mechanism for all low carbon technologies could undermine investor confidence and cause a hiatus in the project pipeline. In particular, this would be extremely damaging to the UK’s burgeoning offshore market, which has seen recent investment commitments from overseas manufacturers totalling more than £400 million. We are working hard to avoid this outcome, but it remains a risk.
The recently published Localism Bill, which includes radical reform of planning laws, is a key concern for the onshore wind sector, which is already suffering project delays caused in part by increased activity from local anti-wind farm groups. Proposals on local referendums, pre-determination, pre-application consultation and the abolition of regional spatial strategies all pose a potential challenge to the onshore sector and if implemented, could harm progress towards our 2020 target of 15 per cent of energy from renewable sources.
Andrew Lee, head of International Sales, Sharp Solar:
April 2010 saw the introduction of the Feed-In Tariff (FIT) after huge anticipation, and this brought an initial boom to the renewable energy market. However, the new Coalition Government's Autumn Comprehensive Spending Review (CSR) introduced a degree of uncertainty about the future of FIT levels.
So 2011 is set to be a hugely significant year for the low carbon economy and green business. Regardless of the medium and longer-term concerns, this is the first year when the UK will have an uninterrupted 12 months of the FIT and a clear understanding of Government strategy on renewable energy. As a result, we expect to see steady growth in cleantech, with an increase in green manufacturing, jobs, awareness and consumer pick-up, while this could also be a key year for businesses to take advantage of the current green subsidies on offer.
Stephen Crosher, Commercial director, quietrevolution Ltd:
Until the transition to a low carbon economy is complete every year will be a significant year.
The UK is far behind other European countries in renewable energy generation capacity, however in the last three or four years there has been a significant shift in attitudes and deployment of renewables and 2011 will see a continuation of this upward trend.
The UK has the potential to be a world leader in offshore wind deployment and skills, small scale wind technologies and marine turbines and wave devices. 2011 to 2015 are the critical years for all of these technologies concluding whether the UK can be in the very top tier of countries leading the world in these technologies and industries or whether we will miss the opportunities that clearly exist and the skills and jobs will go elsewhere in Europe, North America and the Far East.
Dale Vince, founder, Ecotricity:
I certainly hope there will be progress on green issues, though this Government shows no sign of delivering on it's pre-election promise to be the greenest ever. Indeed the signs are that renewable energy will be impaired, through planning law and Feed-in Tariff changes – while nuclear will be enabled under the cloak (of language) of being a low carbon technology.
David Kennedy, Chief Executive of the Committee on Climate Change (CCC):
2011 should be an exciting year in terms of putting in place arrangements to drive down emissions. We hope to see a new set of electricity market rules that will provide stronger incentives for investment in low carbon generation.
The detailed approach to the Green Deal, going beyond offering to lend people money, will be crucial if this flagship policy is to deliver energy efficiency improvement.
And the fourth carbon budget, to be legislated before summer will – if sufficiently ambitious – provide an anchor for action over the next years.
Our Committee will be carrying out reviews into renewable energy, bioenergy and shipping, as well as updating Parliament on the progress made by Government in reducing emissions.
Marketing and communications
Paul Thomas, associate director, Grayling CSR & Sustainability:
2011 will be a challenging year for the green economy but there are also reasons to be positive. From a communications point of view it is likely that much of the media and political attention this year will continue to focus on the fragile state of the UK economy, Government spending cuts and, of course, the Royal Wedding. The environment and green economy will certainly have their time in the limelight, but I think the media is still wary after throwing its weight behind the failed COP15. This has already been shown with the much more measured coverage of Cancun.
However, as the focus hopefully moves away from the economy towards the end of 2011, it is likely that businesses will re-focus their efforts in the sustainability arena particularly as the full implications of the Carbon Reduction Commitment become apparent. A major factor of note is the increasing influence that NGOs and pressure groups are having and will continue to have on business. This trend is linked directly to the rise in the strategic use of digital and social media to exact fast and potentially devastating brand assassination campaigns – only in the past weeks in response to Greenpeace's investigation into its tinned tuna, Tesco announced a complete U-turn to achieve 100 per cent 'pole and line’ by the end of 2012.
Two can play at that game and we will also see organisations becoming bolder in the way they use social media, particularly to engage with consumers on environmental and sustainability issues. In 2010 we saw a number of very innovative digital campaigns that effectively engaged audiences and the number of these sorts of campaigns will no doubt rise considerably.
Energy efficiency & smart technology
Jon Bentley, Smarter Energy lead, IBM Global Business Services UK&I:
I'm optimistic and believe this year will be significant for the future low carbon economy. Not only are major corporations showing signs of returning their attention to issues of sustainability, boosting the market for innovative low carbon solutions, a number of accelerating actions will commence or gain traction.
There will be key decisions made by the Government and retail electricity suppliers regarding the shape of the smart metering roll-out programme. The industry mechanisms will also be largely decided towards the end of the year as we enter 2012, although it will still be some time before we all have a smart meter in our homes.
The first projects under the Low Carbon Network Fund will be well underway shaping the future Smart Grids. This is critical to achieving a more participative relationship between energy consumers and suppliers, a more dynamic balance between supply and demand through both demand management and time-of-use pricing and the integration of the massively increased levels of renewable generation expected by the end of the decade.
The Government's 'Green Deal' and, hopefully, much more communication on energy matters will increase investments in domestic demand-side energy efficiency measures, spur innovation by the many small businesses developing innovative solutions to micro energy generation, home energy use and energy storage and increase not just awareness but active participation in the low carbon economy by UK citizens.
The developing economies, China in particular, will continue to invest heavily in infrastructure in their vast and rapidly growing cities. The sheer scale of commercial development as well as R&D will shift the economics of new technologies, providing significant markets for innovative solutions and driving volume economies and efficiencies into the supply chain. And it will create a powerful set of new competitors seeking to export domestic solutions. 2011 will be no time for complacency for UK innovators.
Sophie Chang, VP Software, 1E:
2011 will be a significant year for the low carbon economy. 1E believes that efficiency in the broad sense (beyond energy efficiency), could be the net new driver for IT innovation; for example if we can free up just 10 per cent of IT spend then $200 billion could be spent every year on new IT solutions, which enable business become more successful, efficient, greener, more cost-efficient in the long-term and reduce their burden on the environment in terms of carbon emissions.
The forecast for software spending looks stable. According to Forrester's 2010 To 2012 Global Tech Industry Outlook, software will lead hardware as the largest category of global IT purchases. With the global IT market set to grow by 7.1 per cent in 2011, the year is set to look much the same as 2010.
From a policy perspective, it’s clear that the focus will increasingly shift towards energy efficiency, which offers the best return on investment.
The Climate talks in Cancun appeared to re-ignite faith in a multilateral climate change process – the expected – or 'hoped for’ outcome. However, it will be interesting to see how the long-term fall-out from COP16 agreement plays out. What’s more, COP17, the 17th conference of the United Nations Framework Convention on Climate Change, the UN's annual climate change negotiations, in Durban could shape the future of our world decisively.
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