December 19, 2014

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Is the U.K. On the Brink of an Energy Disaster?

Consumers are expected to see energy cost increases of 400 percent by 2020.

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By Kye Gbangbola, Founder, Total Eco Management

Recently, the U.K. government pronounced that the British public should prepare for higher energy bills, and breaks in energy supply as seven power stations -- 10 percent of current grid capacity --will be switched off next month.

This places a different complexion on U.K. energy generation for the future, as gas is now set to account for about 60 percent of U.K. power station needs instead of 30 percent today. Consumers are expected to see energy cost increases of 400 percent by 2020. Fuel poverty and child poverty will increase at the same time as welfare state benefits are being cut. Multinationals and their supply chains foresee interruptions in production – of which 70 percent are already experiencing through climatic change droughts and floods.

The Greenest Government Ever?

When elected in 2010, the government claimed to be the greenest government ever. Nearly three years on, most of its policies have failed to deliver. Industry has called for clear, consistent, predictable and strategic policy initiatives that galvanize the resources of government and industry to drive change and tackle our energy problems.

So what has happened to place the U.K. in such a perilous position for its population?

Essentially it is the story of failing policy. There is a concern that the 2007 warnings of the Intergovernmental Panel on Climate Change (IPCC) are no longer guiding the hands of our policy makers.  In recent times, Decarbonisation Targets were deferred to 2016 and feed-in tariff levels were green slashed to a fraction of their original figure (households and business were paid a tariff to generate renewable energy), which resulted in law suits against the government, unemployment, and insolvent companies with shattered projects that were no longer deliverable.

Carbon Reduction Commitments Watered Down

In addition, carbon trading through the Carbon Reduction Commitment has been watered down, resulting in reduced incentives to lower emissions. 

There have been delays in implementing energy efficiency of buildings legislation for both Green Deal and Energy Company Obligation. These provide for property energy efficiency improvements at no up-front cost to the occupier, the result being large scale withdrawal of support from industry and institutions.  

There has also been a nearly three year delay for a definition of Zero Carbon, which drives U.K. Building Regulations, a failure to deliver on Carbon Capture and Storage, and the removal and reduction of subsidies for large scale renewables especially wind.

U.K. Business Loses Confidence In The Green Economy

The result is that business has lost confidence in the green economy to invest, innovate, create jobs, and develop new technologies. However, funding for fossil fuels, including shale gas exploration, has never had it so good. Ironically, U.K. emissions might go down as people are unable to afford heat and light.

But there are better ways of reducing emissions.

In contrast, across the globe the green economy is worth $3.4 billion a year and is growing at 4.3 percent whilst the U.K. is slipping down the league table of green investors. In the meantime, clean energyPresident Obama is delivering rapid growth in the green economy, as are China, Rwanda, Germany, Norway, Denmark, and many more.

Short-term thinking has resulted in the country being left exposed to insufficient power. It is not difficult to see how this can even lead to the loss of lives, given the poverty that will be generated.  The emerging problems in the U.K. have been evident for the last two years, professionals have been talking of their frustrations with a government that says one thing and does another. To respond to our 21st century problems, government must galvanize industry and society to drive change. 

No Conflict Between Resource Conservation And Profit

The U.K. government argues that renewables cannot fill the grid energy gap now or in the future.  This is true if there is no commitment to sustainable development. There needs to be greater balance to avoid the shift towards shale and nuclear, which is now being argued as the way forward.

To fill the gap and achieve energy security, the government has had to go shopping at a time when demand and gas prices are high. Serving to emphasize the fuel security problem; an expected gas supply agreement from the Russian Shtokman field was withdrawn. U.K. energy reserves are projected to fall to 5 percent from the current 15 percent, further endangering the country's energy supply.

Ironically Paul Golby, CEO of power generator Eon, said last month “the wasting of energy should be made a crime.” This may be what the future holds because we did not invest soon enough and now are at an energy cliff. 

According to CDP’s recent annual supply chain survey, 73 percent of multinationals cutting emissions reported associated cost savings. They have learned there is no conflict between resource conservation and profit.

Downgrades, Reporting and the Triple Bottom Line

Globally when governments fail to align with the global imperative to tackle climate change, complex and unforeseen problems can ensue. How we power our economies can serve to heighten, or reduce social tensions. Local and national economies, business confidence, and international credit rating stakeholdersagency downgrades can also suggest to observers that a country’s economy is losing power. 

Stakeholders Betrayed

When the new government was elected in the U.K. in 2010, they inherited many green policies, Climate Change Committees and associated Low Carbon Action Plans.  The hard part -- the structures -- had been set and agreed.  As such anybody could deliver the project design.  

But if the structures for delivery are removed, it should not be a surprise that decline will follow.  In the last year, the claim of being the Greenest Government ever has died and is rarely mentioned. 

Stakeholder engagement has been a key failure. Stakeholders in industry, society and politics that are consulted are largely ignored. Such attitudes to stakeholders erode trust and credibility with decision makers concerned that they have their own agenda and matters of materiality risk and priority are predetermined. 

It is evident that the opportunity to build long-term sustainable value needs to be revived in the U.K.  Only those presiding over the failure know the reasons behind it; the methods of monitoring should be disclosed so the full extent of the challenge can be understood and responded to by those not willing to sleepwalk into a disaster and give up on the potential of what this planet could be. 

About Kye Gbangbola

Kye Gbangbola is the founder of Total Eco Management (TEM) a company determined to be a leading light in the movement to reduce the environmental impacts. Kye is responsible for Development, Asset Management, Corporate Sustainability, and CSR. He is a recognised expert in sustainability reporting and governance, a CIOB Ambassador with interests in leadership, and a representative of the All Party Parliamentary Climate Change Group and the International Integrated Reporting Committee [IIRC] Pilot consisting of 70 of the world's leading organisations.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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