SUSTAINABLE BUSINESS REVIEW
GREEN FINANCE • INNOVATION • ECONOMICS
The Green Revolution: Winds of Change
ECONOMICS Carbon Sinks Going Up in Smoke
GREEN FINANCE Is ESG Investment in Aviation Ready for Take-off?
INNOVATION & TECHNOLOGY P2P Energy Trading: Making the Most of British Renewable Energy
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The Sustainable Business Review is the UK's first student-led quarterly magazine producing thought-provoking opinion pieces around green finance, environmental economics and innovation. We aim to bridge the gap between corporates and students when discussing sustainability, and want to inspire the next generation of environmentally-driven leaders. We are a team of economists, engineers and business students, and we hope that you find our content insightful and it equips you with the knowledge to help gain a new perspective on our world.
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Ivo Degn Co-Founder Climate Farmers Pras Gengatharan Sustainability Partner Deloitte Dr. Richard Munang UNEP Africa Regional Climate Change Coordinator
Max Ewerth President Jamie Alexander Vice President Igor Couto Marketing Co-Director Nara Mammadova Marketing Co-Director Olatomiwa Sanwo Sponsorship Director
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Zaid Nurmamodo Natassia Nascimento Adam Curry Ulysse Abbate
Billy Green Oliver Jeffries Arun Jain
Atharva Palve Shivani Patel Kayil Hassan Anya Corvesor
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ABOUT | 1
Contents
Sustainable Business Review Issue 5
Economics
On the cover Our cover page considers the issues within the Amazon with the ember shaped trees illustrating the devastating forest fires across the region, whereas the right hand side of the waterfall represents hope and the various technologies that now exist to provide sustainable energy sources. Forest Exploits Explores the abuse of the Amazon rainforest by President Bolsonaro, page 3. Investors in Taxi Evaluates the prevalence and importance of ESG investment into the Aviation industry, page 16. P2P the Future Investigates the possibility of countries electricity systems reverting to peer-topeer rather than wired to networks, page 27.
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Carbon Sinks Going Up In Smoke Africa and Innovative Volunteerism Interview with Dr. Richard Munang Turning The Silver Screen Green Climate Change and Inequality: One Solution? The Climate In The EU Is Changing: Politicians Are Taking No Chances
Green Finance Is ESG Investment In Aviation Ready for Takeoff? The Future of ESG Investing - Interview with Pras Gengatharan Are green cryptocurrencies the future of finance? Stop being so Shellfish Subsidisation driving or damaging electric vehicle stock prices?
Innovation P2P Energy Trading: Making the most of our Energy Regenerative Agriculture as the World's Saviour - Interview with Ivo Degn Ready or not? The electric infrastructure race has begun! Old Dog New Tricks: The Future Of Renewable Wind Energy?
Q&A with Dr. Richard Munang
Page 7
Q&A with Pras Gengatharan
Q&A with Ivo Degn
Page 19
Page 31
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CONTENTS | 2
ECONOMICS
Forest Exploits
Carbon Sinks Going Up in Smoke
by Natassia Nascimento
ALSO IN THIS SECTION
10
Turning the Silver Screen Green
12
Climate Change and Inequality: One Solution?
FEATURED
ECONOMICS
Carbon sinks going up in smoke By Natassia Nascimento
Last year, an area equal to seven times the size of London was destroyed in the Amazon due to deforestation. On August 6, 2021, the Brazilian Space Institute (INPE) disclosed that the area destroyed in the Amazon in the past 12 months was 8.712km2, with 47% of it in only one state, Pará. Consequently, the Amazon is now emitting more carbon dioxide than it absorbs, according to a study published in Nature last month. The researchers analysed the atmosphere in four different regions and identified that the southeastern area is the hotspot for deforestation due to logging, farming, agriculture, and livestock rearing. Moreover, the number of fires during the dry season has increased in past years, mainly due to climate change. Drought is now worse than before, causing trees to die and fires to burn for longer. Luciana Gatti, a researcher at INPE, stated in an interview with environmental news site Mongabay that the forest is now at a “tipping point”, being close to losing its power as a carbon sink, and its biodiversity (Gatti et al, 2021).
The relationship between forests and climate change
Brazillian Amazon Rainforest (Destroyed Area in Red)
According to the Global Forest Watch report, 2020 was the third-worst year for forest destruction in the world, particularly in the Amazon, Congo and Southeast Asia. However, deforestation is not only a problem in third world countries. In the past 20 years, Canada, northern Europe (Sweden and Finland), and East Russia have all lost huge areas of forest (WRI, 2021). Although deforestation has risen all over the world, it is crucial to examine why it has been worse in poorer countries. Experts argue that this is a direct consequence of Bolsonaro’s publicly anti-environmentalist stance, along with a lack of conservation policies, both long criticised. During the Covid-19 pandemic, forest destruction increased even more dramatically due to fewer inspections and the dismantling of environmental policy that has been underway in Brazil since January 2019. “Bolsonaro’s great achievement when it comes to the environment has been this tragic destruction of forests which has turned Brazil into perhaps one of the greatest enemies of the global environment”, says Carlos Rittal, a Brazilian environmentalist who works at Germany’s Institute for Advanced Sustainability Studies (Philips, 2020).
CARBON SINKS GOING UP IN SMOKE | 3
FEATURED
ECONOMICS
One of the main reasons might be that these countries are exploiting their economies by increasing agriculture, mining and unsustainable natural resource use.
Aftermath of Pantanal wetland fires in Brazil, 2020
Moreover, other unfavourable practices have also become commonplace, such as a record-high use of pesticides allowed by Bolsonaro, who argues that sustainability is an obstacle to development, despite this having long been proven untrue. The current dismantling of environmental policies in Brazil, including threats of extinguishing the Environmental Ministry, is another reason why the Amazon has had its worst deforestation level in the past 12 years. Degradation of environmental conditions results in negative externalities that bring social costs to the population, especially the poorest, in addition to worsening inequality. For example, in poorer urban areas air and water pollution is worse, there is less sanitation and recyclable garbage removal, and a higher risk of extreme events such as landslides and floods. In rural areas, the negative externalities can be observed via high land to property concentrations, and mechanisation that leads to exodus to rural and agricultural frontiers, where people then contribute to deforestation in order to carve out new land.
These problems do not look likely to be resolved anytime soon. The fiscal austerity Brazil is now undergoing has hit public budget allocations towards environmental issues, particularly in fighting deforestation and illegal activities in the Amazon. Moreover, whilst the Amazon grips the world’s attention, it is also important to point out that Brazil’s Pantanal, the world’s biggest tropical wetland, is also in danger due to the worst drought in over 40 years and because a third of it was hit by fires last year, with atrocious effects to its biodiversity. All this environmental destruction damages Brazil’s international image and, although Alok Sharma, the president of Cop26, said wealthy countries must step up to help poor nations bearing the brunt of climate breakdown, it is important that Brazil itself takes measures to ensure sustainable development. This requires environmental policies to be considered a priority, just as education, health and others are. The 2020 Olympics had medals made from tech garbage, leaving a message at the Final Ceremony that actions must be taken together. It must be now or it might be too late to fully understand and recover from all the social, economic, and environmental consequences of these rapid and unprecedented changes.
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FEATURED
ECONOMICS
References:
Amigos da Terra - Amazônia Brasileira, 2021. accessed 10 August, 2021. <http://emkt.amazonia.org.br/emkt/tracer/? 1%2C6966057%2C05340b77%2C0a0b&fbclid=IwAR2i9iiO4Sxc2TDPgn6GM5tIh9i1OpvGUdcIltPE9jgxzFaDS5a8JQaJ5og>
Branne, Peter 2019. The Amazon Is Not Earth’s Lungs, The Atlantic, accessed 05 August, 2021. <https://www.theatlantic.com/science/archive/2019/08/amazon-fire-earth-has-plenty-oxygen/596923/> Carrington, Damian 2021. Amazon rainforest now emitting more CO2 than it absorbs. The Guardian, accessed 30 July. <https://www.theguardian.com/environment/2021/jul/14/amazon-rainforest-now-emitting-more-co2-than-it-absorbs>
Gatti, L.V., Basso, L.S., Miller, J.B. et al. Amazonia as a carbon source linked to deforestation and climate change. Nature 595, 388–393 (2021). <https://doi.org/10.1038/s41586-021-03629-6>
Kimbrough, Liz 2021. Brazil’s Amazon is now a carbon source, unprecedented study reveals. Mongabay accessed 21 July, 2021. <https://news.mongabay.com/2021/07/brazils-amazon-is-now-a-carbon-source-unprecedented-study-reveals/>
Philips, Tom 2020. Amazon deforestation surges to 12-year high under Bolsonaro. The Guardian, accessed 05 August, 2021. <https://www.theguardian.com/environment/2020/dec/01/amazon-deforestation-surges-to-12-year-high-under-bolsonaro>
Pruitt-Young, Sharon 2021. Parts Of The Amazon Rainforest Are Now Releasing More Carbon Than They Absorb. National Public Radio, accessed 05 August. <https://www.npr.org/2021/07/15/1016469317/parts-of-the-amazon-rainforest-are-now-releasing-more-carbon-than-theyabsorb>
World Resources Institute, 2021. Global Forest Watch. accessed 15 August, 2021. <https://www.wri.org/initiatives/global-forest-watch>
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Q&A Dr. Richard Munang UNEP Africa Regional Climate Change Programme Coordinator
Dr. Richard Munang Why have so few African countries set net-zero targets? The statistics are unequivocally clear. In the first round of submitting climate action commitments, popularly known as Nationally Determined Contributions (NDCs), up to 98% of African countries ratified their commitments making Africa the region with the highest number of ratifications. These NDCs balanced both adaptation and mitigation actions with clear trajectories towards cuttings emissions. Now with the submission of 2nd round commitments, already 46 countries have submitted commitments that cover mitigation emissions reductions as well, with 9 countries having submitted more ambitious emissions reduction targets than the first round. Among these 9, Namibia for example has set a target of emissions cut to the tune of 91% conditional & 14% unconditional. Ethiopia has set 68.8% conditional & 14% unconditional. All these ambitious reductions are happening in a region that has contributed least to the changing climate, accounting for only 2–3% of global emissions with individual countries accounting for less than 0.1% of total global emissions. In addition, African rainforests have been shown to be stronger carbon sinks than the Amazon, absorbing over 1.5 times more carbon than they were originally thought to absorb. This already puts Africa on a “carbon positive path” where it can be said that the continent is actually a sink to the entire world. Considering that emissions have no borders, and there are no additional significant emissions to be cut in Africa in terms of the global total, the net zero target focus urgently needs to be put where most significant cuts can be made, which is with the high emitting annex 1 countries.
Can Africa go green whilst also eradicating poverty? It is estimated that a move to lowcarbon, greener economies has the potential to create 60 million jobs by 2030. In Africa, simulations carried out indicate that an integration of the green economy across diverse sectors, where we have climate action being premised as an accelerator of socioeconomic growth, as opposed to silo climate and environmental aims has potential for significant employment creation. As an example, in Zimbabwe, an integrated approach of greening across different sectors – including energy, industrial processes, agriculture, and forestry – with naturebased agriculture at the core, has the potential to create up to 30,000 jobs for every $1 million invested. This number is far more than only 100 jobs created for every $1million invested in a hydro dam and 25 in commercial solar. Using UNEP work, in Cameroon, simulation runs showed, that implementing Cameroon NDCs aims in an integrated trajectory of greening and maximizing productivity of agrovalue chains using clean energy, transport & ICT to cover the entire country agro-ecological zones would break even in about 1 year. In addition, revenue inflows would double investment costs in 10years. Furthermore, such a paradigm would produce 13million assorted jobs along the agro-value chain including in assorted areas of ICT, clean energy & transport – unlike business as usual (BAU) which will at best produce only 8million jobs. On emissions, projections showed 8 times lower emissions than the BAU approach by 2035. So, the green economy pathway offers the continent an opportunity to not only address key issues of youth unemployment to eradicate poverty but
do so while ensuring meeting of the climate action commitments of the continent. Since Africa emits a small proportion of global emissions yet faces such high climate change consequences, what should Africa’s focus be - its own emissions, or the world’s emissions? The first place to start is that climate change has no boundaries. The impact of emissions knows no boundaries. Specifically, for Africa, despite being a negligible emitter and contributing negligibly to the changing climate as earlier noted, the continent stands out for its disproportionate vulnerability. Africa is already heating up twice as fast as the rest of the globe, and 20 countries are already warming faster than the globe. With the latest 2021 IPCC report findings, that the globe is on track to breach the 1.5 ℃ warming threshold in just 2 decades, for Africa is that the dire socioeconomic consequences of climate change that were projected to occur by 2030 - 2100, be it the GDP drop of up to 15% that was originally forecast to happen in 2030, & by 50 – 85% by 2050, the 14% higher sea level rise, the 40% decline in yields in key staples; and shrinkage of incomes by a whopping 75%, will move much closer to the present. And with this, the escalation of socioeconomic misery that is already at breaking point - be it the 257million people experiencing hunger; the over 12million young people who need jobs every year, that remain disenfranchised in unemployment; the up to 60million children that are malnourished and costing the continent between 1.9% and 16% of its GDP; the 20times less productive economies compared to global competitors; the COVID-19 economic
Q&A | 7
impacts where Africa is projected will lose nearly 50% of all jobs on the continent meaning that the 7 – 8million young people who are entering the labour market in 2020/21 are facing dimmer prospects than in normal times – among many. This reality therefore means that for Africa, focus has to be on how efforts to reduce the emissions that the region has committed to in its NDCs, can be achieved in trajectories that maximise realisation of key socioeconomic priorities – food security, creation of income, enterprise and jobs, and enhanced economic competitiveness. What sector of African economies public or private - will be most important in providing the investments and infrastructure needed for them to go green? The key is a whole societal approach. What I call complementarity between state & non-state actors, including individual citizens is unavoidable for effective implementation actions. Africa’s performance on the policy space is notable. Just to give examples, as earlier noted, up to 98% of countries – 52 of 54 countries in Africa have ratified their Nationally Determined Contribution (NDC), making Africa the continent with the highest compliance rate. As countries move to submit second round NDCs, already 46 African countries have submitted revised NDCs with 9 being highlighted for submitting stronger targets. Six countries have submitted their National Adaptation Plans (NAP). Least Developed Countries, majority being in Africa, are increasingly active on climate change policy globally. The African union (AU) has a climate change strategy for countries across the continent to domesticate into local policy & legislations and we have a number of African countries that have
set up climate change legislations. These are in addition to enabling sectorial polices – including Climate Smart Agriculture (CSA) policies for resilience building in the most critical sectors - agriculture, feed-in tariff policies to drive clean energy investment – among key areas. But implementation remains the biggest gap. This is because of a paradigm where the expectation is for government to formulate policy, legislate, implement policy & legislation, monitor implementation, and report back progress. This is however misplaced because it fails to tap onto the 2 most critical constituency of implementers in Africa – the informal sector which engages up to 80% of labour in Africa, and the youth who constitute over 60% of Africa’s population. How these key groups of actors can be incentivised to become implementers of policy by investing in practical solutions and inform relevant policy recalibration from the empirical data and feedback from their actions to ensure policies are more targeted to enable what has been proven to work is the urgent need for the continent to ensure optimal implementation of policies. Unlike the rest of the world, the populations of many African countries are getting younger - what kind of actions can young people take to help solve climate change? “It is the young trees that make up the forest”. In context, this African proverb is a reminder that implementation of climate action and development will remain unrealised unless we tap the youth who at 60% of the population, constitute a significant proportion of the constituency of implementers in Africa. And tapping them calls for one thing – incentives, as follows:
Dr. Richard Munang
First, is narrative. Young people in Africa constitute 60% of the unemployed. These youth are on the lookout for income opportunities to provide for themselves. The only way we can tap into them to drive climate action is if they can see that it can unlock the incomes they are looking for. Accordingly, the climate action narrative must urgently graduate from projecting liability to projecting socioeconomic & enterprise opportunities. For example, landbased emissions account for a majority 56% of Africa’s emissions and among the key drivers is land degradation through deforestation for fuel wood like charcoal. A narrative of planting trees to reclaim deforested areas, coupled with regulations such as banning deforestation, which are what is traditionally applied on the continent will have little impact in incentivising youth to climate action. However, on the flipside, a narrative of driving climate action from an opportunities perspective by delivering on-demand solutions to the community as a market will go a long way. For instance, undertaking waste recovery to products like fuel briquettes towards tapping the lucrative $20billion a year charcoal market with a cleaner, sustainable alternative will be an attraction because of the socioeconomic opportunities it presents. Second is youth skills retooling. For Africa’s youth to become drivers of non-capital-intensive enterprises through the climate lens, requires that they improve, refine, adapt, their skills, talents, interests, ongoing work to align in devising climate action solutions that offer value for which the community can pay a premium. I gave the example of waste recovery to fuel briquettes which is a non-capitalintensive solution that taps a high demand area of domestic cooking where over 70% of households on the
Q&A | 8
continent depend on biomass fuel. But this is just one example. Through an incubation approach we have developed called Innovative Volunteerism, we are structurally guiding and inspiring young people of different backgrounds to turn their passion into profits and retool their skills in developing and decentralising climate action solutions that address on-demand areas among communities. Through this they are fabricating and decentralising climate action solutions of solar dryers to power value addition, tap the $48billion in post-harvest losses (PHLs) and turn them into income, and limit the waste of ecosystems goods and services lost as PHLs. We are seeing them recovering agricultural waste, turning it into fuel briquettes & biofertilizer to fetch a market. These young people are also sharing their experiences and lessons online to influence more youth to take up innovative volunteerism. Third, targeted policy incentives, especially fiscal incentives. Favourable fiscal policies play a significant role in shifting market behaviour and investments from one area to another. An example to illustrate this can be drawn from Kenya where a fiscal policy incentive exempting value added tax on LPG led to a significant behavioural change among consumers and producers in the market, towards favouring LPG. In less than a decade, the number of LPG filling plants rose from 9 to 105 plants, while consumption almost doubled from 151,700 tonnes to 312,000 tonnes over a 3-year period. Accordingly, targeted fiscal incentives are crucial, but youth must seize on them to bring impact to scale. For example, to minimise risks of charcoal & biomass and unlock opportunities, the latest step that Kenya has taken to incentivise clean cooking is through the Finance Act 2021. This legislation exempts 3 classes of clean cooking
from 16% VAT – including sustainable fuel briquettes. This in addition to the notable affordability where briquettes are up to 2times cheaper than charcoal, creates a conducive environment for briquettes production to tap a ready gap. The Youth of Africa should leverage such incentives and devise their own climate action enterprises that tap into these incentives and in the process, generate empirical data on what works, and this can further inform more targeted incentives in future policies to enable expansion of what works. For example, exempting VAT on products generated out of climate action solutions to excite consumer markets, offering tax holidays for youth entrepreneurs who establish climate action enterprises to enable them to minimise their tax burden during the formative years of their initiatives – all these can be justified if young people show that they can actually create enterprises using whatever enabling policies are already in place. Fourth is non-policy incentive of attitude. Policy incentives regardless of how timely they may be, will accomplish very little if they fall on passionless, purposeless citizens. The responsibility of devising competitive solutions that turn challenges into opportunities to actualise the intended impact of policies falls squarely on constituencies of implementers like you the youth. This however calls for a right mindset- a mindset of discipline, purposeful passion, unborrowed vision, & selflessness. This is irreplaceable in motivating an individual to action, and we owe ourselves the task of disciplining ourselves to drive climate action. To what degree does Africa need other countries’ help in overcoming climate change?
Dr. Richard Munang
Africa is a leading global sink to the dangerous emissions that cause climate change. In addition, the spirit and letter of the Paris Agreement is clear that climate change is a global threat that requires a global response. The implication is therefore that it is not about “Africa needing help” but about fostering a global joint effort in combating climate change, driven through each respective countries / regional context. In Africa, this means that any collaborations it fosters with other members of the global community, such as the market & nonmarket mechanism of Article 6, and especially 6.2 on internationally transferrable mitigation outcomes, to combat global climate change need to align with the urgency to ensure interventions accelerate realisation of socioeconomic priorities – be it food security, creation of income & enterprise opportunities, expanding competitive economic growth etc. Can we come together to solve climate change? Are we doomed to repeat failures such as in distributing COVID-19 vaccines? The globe has proven time and time again that indeed collaborating to combat threats that are shared is very possible. Passing of the Paris Agreement in 2015, adoption of the SDGs the same year, now submission of NDCs, and submission of ambitious second round commitments etc., all prove the possibility for collaboration. But the latest reminder we are learning from COVID-19 is that collaboration needs to be contextual. Such collaboration cannot be one-sided or based on patronage and benevolence, but rather urgently needs to move towards win-win market collaborations, with tangible socioeconomic benefits to stimulate implementation investments even from local actors.
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ECONOMICS
Turning the Silver Screen Green By Zaid Nurmamodo
Mad Max: Fury Road (2015)
Think of the polluted cityscapes of ‘Blade Runner 2049’, the ice-encapsulated world of ‘Snowpiercer’, the dystopian desert world of ‘Mad Max: Fury Road’. Hollywood has a proclivity to hyperbolise climate change as an inexorable, apocalyptic catastrophe - distorting viewer’s perceptions of climate change. In reality, climate change is a preventable problem - but Hollywood’s indolence in the fight against climate change continues to blur the lines between their own dismal depictions and our future reality.
The Big Picture Hollywood’s leading role in accelerating climate change dates back to the genesis of the film-industry itself. Prior to the introduction of digital cameras, films were shot on film-rolls. Film-rolls are notoriously unsustainable. They generate waste in the manufacturing process, require dangerous chemicals during development and are likely to end up in a landfill. Though Hollywood’s move away from film to digital over the last decade has been environmentally beneficial, the benefits have predominantly been as a by-product of ameliorated workflow and technological development rather than direct carbon reduction (BFI, 2020). Despite advancements in technology and storytelling, the production process still experiences similar challenges that it used to face when shooting on film-rolls. The necessity for tight schedules has fostered a culture of overpreparation; which, when paired with seemingly unlimited budgets, has been a recipe for unsustainability.
Back-up cameras have their own back-up cameras, actors are flown in on half-empty private jets, and staff are expected to commute to work using their own cars. Rather than forming intricate plans, Hollywood prefers to solve its problems by throwing money at it. This may explain Hollywood’s drastic over-use of transport which accounts for over 50% of total carbon emissions in the production of a big-budget film (BFI, 2020). For a typical big-budget production - a film with a budget of over £50m - the energy consumed could power Times Square for 5 days, and the weight of the waste generated equates to 313 blue whales. As the film industry grows, emissions are expected only to increase. Film consumption has risen with the introduction of streaming services such as Disney+ and Netflix. Despite the demand for streaming soaring, especially during the pandemic, the amount of energy consumed by streaming content has fallen - as green power rises in popularity and equipment becomes more efficient.
Figure 1: Carbon Emissions Data Breakdown
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A recent study (Carbon Trust, 2021) found that streaming an hour of Netflix is the equivalent to boiling a kettle for only six minutes! Unfortunately, emissions in the production process aren’t as trivial, with 50% of Netflix’s total carbon footprint coming from the production process alone. If anyone should be taking action, it’s Hollywood.
Lights, Camera, Action In their 2020 ESG Report, Netflix pledged to achieve netzero emissions by 2022 - following a rising trend of carbon-neutral pledges in the film-industry. These pledges have been subject to scepticism, and rightly so. Whilst Oscar speeches, environmental documentaries and carbon-neutral pledges are a step in the right direction, immediate action to reduce Hollywood’s carbon-footprint is essential. The necessity for sustainable and actionable solutions were highlighted in a recent BFI report, ‘A Screen New Deal’. Single-use plastics, one of Hollywood’s most discernible manifestations, remains a major issue in the production process. Accordingly, the report encourages utilising technology in a ‘design for deconstruction' initiative, promoting reusable set construction in a bid to reduce wastage. To combat emissions from transport, the report also suggests that studios can use transport data to provide infrastructure that supports more sustainable transport modes such as public transport stops and shuttle services.
However, the success of reducing the two most rampant sources of carbon emissions in the filmindustry - transport and energy usage - may ultimately be dependent on the advancements of green technology within the transport and energy sectors respectively. Hollywood needs to stop treating this issue as low-priority and start taking steps to reduce their carbon-footprint. If Hollywood is serious about achieving carbon-neutrality, there must be more investment in green technology, and more utilisation of available data to prevent overpreparation in bigbudget productions. This, however, doesn’t absolve the responsibility of smaller productions, or viewers at home, from also taking actions to mitigate carbon emissions. Stakeholders in the industry need to align incentives and step up to the challenge. After all, climate change is a shared problem, with shared solutions.
Blade Runner 2049 (2017)
References:
Carbon Trust, 2021. Carbon impact of video streaming. [online] Available at: <https://www.carbontrust.com/resources/carbon-impact-of-videostreaming> [Accessed 28 July 2021] BFI, 2020. A screen new deal. [online] Available at: <https://www.bfi.org.uk/strategy-policy/policy-statements/sustainability> [Accessed 27 July 2021] BFI, 2020. Green matters [online] Available at: <https://www.bfi.org.uk/strategy-policy/policy-statements/sustainability> [Accessed 27 July 2021] Bloomberg.com, 2021. Your Netflix Habit Has a Carbon Footprint, But Not a Big One. [online] Available at: <https://www.bloomberg.com/news/articles/2021-06-10/your-netflix-habit-has-a-carbon-footprint-but-not-a-big-one> [Accessed 28 July 2021] Netflix, 2020. Netflix Environmental, Social & Governance report 2020. [online] Available at: <https://ir.netflix.net/governance/ESG/default.aspx> [Accessed 28 July 2021] Independent.co.uk, 2021. Netflix promises to wipe carbon footprint in under two years [online] Available at: <https://www.independent.co.uk/climate-change/news/netflix-net-zero-emissions-2022-b1824262.html> [Accessed 28 July 2021]
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Climate Change and Inequality: One solution? By Adam Curry
Inequality and the concept of mobility Equality of opportunity is fundamental to society. There are currently a number of measures in place to try and create this in the UK, with policies such as free healthcare and compulsory education until the age of 18 being good examples of these. A way to measure this equality is by a concept called social mobility, which is the ease with which an individual can change their social status from their current one. This can be both upwards, becoming richer, and also downward mobility, which demonstrates how easy it is to stay wealthy across generations.
The UK & Global issue Using standard measurements of inequality such as the gini coefficient, and social mobility as demonstrated in the below graphic highlights the problems that the world is currently facing. Inequality is getting worse every year, and the future is looking bleaker for every new generation. With rising inequality comes a whole array of associated issues, explored in depth in The Spirit Level (Pickett & Wilkinson 2010). Their
1990-2017 UK Gini coefficient, ONS
key conclusions from the book being that in eleven different health and social issues, ranging from physical health and education to levels of violence and child well-being, countries that are unequal perform worse in every single category. Their empirical research highlights the need to solve this issue, and should be something that all sides of the political spectrum can agree on.
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Green Businesses as a solution Climate change is an issue that affects all facets of life, businesses included. Whether they be changes to business practices or the emergence of thousands of entirely new corporations in the “green” sector, the impacts are likely to be large. It is because of this that some argue combating climate change might prove an opportunity to help combat issues like inequality, perhaps through increasing social mobility both globally and domestically. The UK government has created a “green industrial revolution” plan, which is predicted to create 250,000 jobs alone across clean energy, transport, nature and technologies. With £12bn of public money and approximately £36bn from the private sector (HM Government 2020), this provides a massive opportunity for social change. Increased investment in key sectors such as low carbon hydrogen power, carbon capture, and new advanced nuclear power showcase how these new industries and technologies are increasingly available to anyone. There is greatly increased competition and accessibility to these jobs because they are new, as there are fewer pre-existing barriers aiding that might favour those already in such industries. The research team from the Coalition for Urban Transitions found that low-carbon options in transport and buildings can improve public health by reducing air pollution, which is statistically worse in poorer areas and neighbourhoods. Moreover, a survey of over 700 studies found low carbon options create jobs, enhance productivity, and cut energy bills, with most gains enjoyed by low-income urban residents (Gouldson, A., Sudmant, A., Khreis, H. and Papargyropoulou, E., 2018). Therefore, those most vulnerable to climate change and inequality are also those that would benefit the most from actions undertaken in these areas. Furthermore, many recent issues created by the impact of Covid-19 can also be solved by reducing inequality. A model that seeks to find correlations between 41 different variables and American state-level deaths from covid-19 found that only three variables “consistently have non-zero coefficients”: inequality, population density and nursing-home residents per person. And of those three, inequality has the biggest effect. (The Economist 2021). There is clear evidence that despite a rapidly changing world, both climate change and inequality can be targeted simultaneously. The opportunities created in tackling both these problems will help foster equality between people, irrespective of current social position. This greater equality going forward may mean that a future greener world is also a fairer one. References:
Chetty, Raj and Grusky, David and Hell, Maximilian and Hendren, Nathaniel and Manduca, Robert and Narang, Jimmy.The Fading American Dream: Trends in Absolute Income Mobility Since 1940 2016 viewed 20th August 2021 <https://opportunityinsights.org/paper/the-fading-american-dream/>
The Economist July 31st Edition 2021, Why have some places suffered more covid-19 deaths than others? The Economist, viewed 24th August 2021 <https://www.economist.com/finance-and-economics/2021/07/31/why-have-some-places-suffered-more-covid-19-deathsthan-others>
HM Government 2020, The Ten Point Plan for a Green Industrial Revolution, Department for Business, Energy & Industrial Strategy (UK), viewed 14 August 2021, <https://www.gov.uk/government/publications/theten-point-plan-for-a-green-industrial-revolution>
Pickett, K. and Wilkinson, R. (2010) The spirit level: Why equality is better for everyone. Harlow, England: Penguin Books. Gouldson, A., Sudmant, A., Khreis, H. and Papargyropoulou, E., 2018. The economic and social benefits of low-carbon cities: A systematic review of the evidence. London and Washington DC.
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The Climate in the EU is Changing: politicians are taking no chances By Ulysse Abbate With more and more top-level politicians in the EU supporting ‘sweeping environmental reforms’ as a remedy to natural disasters, the EU has declared hostilities against climate change and have approached the threat from many angles, including: only selling no-emission cars by 2035, the Carbon Border Adjustment Mechanism (CBAM), reforming the Common Agricultural Policy (CAP). But do these policies make economic sense?
Only selling zero-emission cars by 2035 By 2030, 55% of CO2 emissions plan to be cut, whilst 100% of cars to be sold in the EU will be emission-free by 2035. Whilst this may seem a drastic but necessary step to achieving the EU’s climate goals, the economic implications of such measures could be great. Big businesses might be comfortable adapting their production lines to cater for electric vehicles (some had begun before this announcement), but smaller businesses, who were until now exempt from these plans, will be forced to change too. This could cause many to fail, and potentially encourages a more monopolistic car industry. The sizeable role in the industry that small businesses (dark blue) play compared to medium (red) and big (light blue) are shown on the left.
The Carbon Border Adjustment Mechanism (CBAM) Currently, EU businesses in certain sectors (like aluminium and steel) pay penalties if their practices breach environmental regulations. However, this scheme can lead to ‘carbon-leaking’, where businesses move abroad to benefit from relaxed environmental standards. Beyond making the eco-friendly ambitions of the EU redundant, carbon-leaking moves investment from the EU, leaving it fewer revenues, from a combination of lost business taxes and an increase in the cost of imports. With the new CBAM, they would tax those foreign companies who had previously avoided such environmental regulations, excepting those with similar standards to the EU already in place. Politically, this causes discomfort for foreign countries, like China, whose businesses may suffer from such taxes. Economically, it might lead to retaliatory tariffs, and eventually risk a trade war, and would set a precedent for other countries to follow suit in creating their own green tariffs. Therefore, with CBAM the EU can expect a reduction in carbon-leaking, and even an increase in revenue if foreign countries don't retaliate, by giving them an opportunity to tax them instead. Nevertheless, what will happen in reality remains unknown.
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Reforming the Common Agricultural Policy (CAP) The Common Agricultural Policy (CAP) is a historically and financially significant part of the EU's total budget. With the agriculture sector in the EU having huge lobbying powers, reform has been difficult, particularly regarding any policies that may threaten farmers’ production techniques. Unfortunately for those farmers, the ecofriendly policies of the CAP do threaten farmers’ practices… The mandatory parts of the scheme include the use of 3% minimum arable land for biodiversity, the supporting of organic, not industrial, farming, and the protection of animal welfare. With farmers now having to pay 3% of their investment into non-productive assets and having to opt for more expensive production techniques, marginal costs per unit of output increases. Graphically, this looks like: Initially, with consumer demand Y being fixed, prices will increase to match these increasing Marginal Costs, so that businesses can fulfill their profit-maximising tendencies. This means that some consumers will lose the ability to buy the goods, so Demand drops, which brings business' revenue down too, and can lead a rise in unemployment. Will it work? While these three policies are not the only ones to be implemented by the EU, they are the ones that will most strongly impact its economy. Whilst some, like the CBAM, may generate income for the EU government itself, many businesses and industry leaders are against the moves, arguing that they will harm the economy instead. Pekka Pesonen, in the agriculture industry, argues that projects like the CBAM will hurt import channels, which could lead to higher prices.
"Concrete solutions, especially in agriculture, are still lacking' - Pekka Pesonen Whilst these policies still face many hurdles, both within and outside the EU, it is undeniable that the EU is now a top global contender in using market forces to fight climate change. Whilst voices on either side are loud and often backed by sound reasoning, one thing is clear: the EU's ambitious plans will serve both as a test of government strength against business interests, and as an example, whether it be positive or negative, to other countries thinking of doing the same. References:
The Economist. (2021) A less than jolly green giant. Available at https://www.economist.com/europe/2021/07/15/why-the-european-union-is-a-lessthan-jolly-green-giant (Accessed: 19th July 2021) European Commission. (2021) Carbon Border Adjustment Mechanism: Questions and Answers. Available at https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_3661 (Accessed 20th July 2021) Eurostat. (2021) Structural business statistics overview. Available at https://ec.europa.eu/eurostat/statistics-explained/index.php? title=Structural_business_statistics_overview (Accessed 20th July 2021) European Commission. (2021) The new common agricultural policy: 2023-27 Available at https://ec.europa.eu/info/food-farming-fisheries/keypolicies/common-agricultural-policy/new-cap-2023-27_en. (Accessed 20th July 2021) The Economist. (2021) At the coalface of climate policy. Available at https://www.economist.com/finance-and-economics/2021/07/15/the-eu-proposesa-carbon-tariff-on-some-imports. (Accessed 21st July 2021) COPA-COGECA. (2021) Twitter. Available at https://twitter.com/COPACOGECA/status/1415346041029861377?s=20 (Accessed at 21st July 2021) European Commission. (2021) Citizen support for Climate Action. Available at https://ec.europa.eu/clima/citizens/support_en (Accessed at 23rd August 2021)
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GREEN FINANCE
Investors In Taxi
Is ESG Investment In Aviation Ready for Take-off? by Atharva Palve
ALSO IN THIS SECTION
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Are Green Cryptocurrencies the Future of Finance?
23
Stop being so Shellfish
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A Deep Dive into ESG Financing
Is ESG Investment in Aviation Ready for Take-off? The widely acknowledged success of the aviation industry as a highly convenient mode of global transportation has overshadowed the undeniable fact that it is a primary source of greenhouse gas emissions, accounting for 2% of worldwide CO2 emissions (ATAG 2020). However, the industry’s subsequent slowdown, post-COVID-19, has brought into focus how crucial it is for the aviation sector to reroute onto a more sustainable flight path. This is increasingly being addressed via ESG financing, which aims to reduce an airline’s carbon footprint through investment in more energy-saving technology. Financing options can be optimised to cater for each area of ESG, helping to push forward more sustainable business models within the aviation industry. ESG investments in aviation allow airlines to keep pace with continuously evolving environmental regulation whilst also aligning with the interests of governments, investors and consumers.
Aviation has not traditionally been perceived to be ESG compliant, owing to the industry’s contribution towards rising carbon emissions. However, the COVID-19 pandemic has accelerated the shift towards more sustainabilityinfluenced decision making, which has triggered a surge in ESG investments. So much so that research by PwC found that ESG funds are set to overtake traditional funds by 2025, with their value is projected to exceed €7.6 trillion (Financial Times 2020). This rapid uptake has widened the field of opportunity for investors and corporations alike, with major players in aviation now increasingly looking to ESG financing as a means of securing future growth. Two key forms of ESG financing can be undertaken; the first is characterised by investors raising funds to finance specific sustainable projects. These financial instruments are commonly labelled “green” and include green bonds, green investment funds and green loans, among others. An alternative form of ESG financing, termed “sustainability linked” financing, requires borrowers (i.e. airlines) to meet particular ESG performance targets, which can then influence their financing terms and coupon payments. In contrast to the first option, these “sustainability linked” instruments are not directly attached to a certain project. Instead, they heavily rely on performance targets, which can create a conflict of interest between airlines and investors since airlines are rewarded for meeting targets whilst investors benefit when corporations fall short of them.
The Current Flight Path Following the restraints COVID-19 placed upon the aviation industry, airlines have been looking to streamline their business models in an attempt to become more future proof than ever before. As a consequence, the aforementioned ESG financing options are increasingly being taken up by airlines to decarbonise their operations. Etihad Airways, for example, recently issued a $600 million Sukuk (Islamic bond), the first sustainability-linked bond in the aviation industry, which requires the airline to meet certain carbon reduction targets (Etihad 2020). These include a 50% reduction in net carbon emissions by 2025, a commitment to carbon neutrality by 2050 and a 20% reduction in emissions from their passenger fleet. The proceeds of this bond will go on to finance investment into more fuel-efficient aircraft and research into alternative
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aviation fuels. Various other corporations in aviation have already tapped into ESG financing as it provides a diverse range of opportunities to sustain future growth.
The Future Flight Path The value of ESG financing ultimately rests on a corporation’s ability to quantify and classify its environmental pledges in a transparent manner. Hence a credible framework governing ESG activity, such as the EU Taxonomy Regulation, must adequately define which activities in aviation are legitimate to prevent investors from falling prey to “greenwashing” - the act of corporations providing misleading claims regarding their sustainability initiatives. Until this comes into full force in the EU and comparable regulation is implemented in the UK, ESG financing in aviation will need to balance a fine line between the “diversification and reputational” benefits it provides and the potential risks of greenwashing it can create (A21MX 2021). Therefore, in the face of strengthening environmental regulation, increased social awareness of ESG issues, the
COVID-19 pandemic and improved classification of ESG activity, ESG financing in aviation will become increasingly prevalent and help accelerate the decarbonisation of the industry. As to whether ESG investments are ready for take-off, they’re very much taxiing towards the runway and will imminently be prepared for take-off. References A21MX (2021) The opportunity for green finance in the aviation sector: https://a21.com.mx/index.php/rumbo-altura-yvelocidad/2021/02/14/opportunity-green-finance-aviation-sector ACC Aviation (2021) The Rise of ESG in Aviation Financing Transactions: https://www.accaviation.com/the-rise-of-esg-in-aviation-financingtransactions/ ANA (2018) ANA HOLDINGS Becomes World's First Airline to Issue Green Bonds: https://www.anahd.co.jp/group/en/pr/201809/20180928.html ATAG (2020) Facts and Figures: https://www.atag.org/facts-figures.html BNP Paribas (2020) JetBlue SLL RCF Signals a new sustainability flight path for aviation: https://cib.bnpparibas/jetblue-sll-rcf-signals-a-newsustainability-flight-path-for-aviation/ Deutsche Bank (2019) Deutsche Bank provides first green financing of commercial aircraft: https://www.db.com/newsroom_news/2019/deutsche-bank-provides-firstgreen-financing-of-commercial-aircraft-en-11666.htm Etihad (2019) Etihad becomes first airline to raise funds tied to United Nations sustainable development goals: https://www.etihad.com/en-gb/news/etihad-becomes-the-first-airline-toraise-funds-tied-to-united-nations-sustainable-development-goals Etihad (2020) Etihad becomes first airline to issue sustainability linked Sukuk: https://www.etihad.com/en-gb/news/etihad-becomes-first-airline-toissue-sustainability-linked-sukuk Financial Times (2018) Schiphol becomes first European airport to sell green bond: https://www.ft.com/content/1fd66748-d5f4-11e8-a85433d6f82e62f8 Financial Times (2020) ESG funds forecast to outnumber conventional funds by 2025: https://www.ft.com/content/5cd6e923-81e0-4557-8cffa02fb5e01d42 Sydney Airport (2019) 2019 Sustainability Report, p19: https://assets.ctfassets.net/v228i5y5k0x4/3L1fje06denld1ZaC1fI04/c6d0d6f 18b113473a4422549c9e40da6/SYD_Sustainability_Report_2019_Interactive. pdf
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Q&A Pras Gengatharan Sustainability Director Deloitte
First of all, how would you define sustainable investing? How does it differ from mainstream investing? What initially led you to move to this area? Sustainable investing is a process of looking for companies that are doing the right thing rather than firms that aren’t doing the right thing. When ESG first became a theme, there was a lot of negative screening of bad firms, that don’t meet a certain threshold. Investors would then settle on that and feel like they have done their part. Now its important to look deeper, do they care about the environment? People? Sustainability day to day? Further, when I first joined at my last company, I gravitated towards a fund that was specifically looking towards socially responsible investments. There wasn't so much a buy in from the company or clients, nevertheless the fund addressed the need for an ethical lens in investing. As the years have gone on I’ve been fascinated by that work within asset management. By the time I reached Deloitte, I came to the conclusion this is exactly the area where I want to lend my skills and efforts to. Sustainable investing can range from integrating basic ESG considerations into investment decisions to full impact investment. What are the differences between these investment strategies? Do you think a shift to impact investing is as inevitable as a shift to simply integrating ESG considerations? ESG investing will simply become mainstream investing in the future. Its the obligation of any portfolio manager to update their toolkit. Currently, the expertise is there to integrate ESG into the toolkit as part of a framework or generally by becoming an impact investor in a loose sense of the word. Whether or not this happens comes down to many factors including client preferences.
The question then becomes whether we move from a profit driven to an impact driven process. Across regions, we are seeing changing regulations from voluntary to mandatory disclosures and more scrutiny. Savvy investment firms that wanted to get ahead have treated this as a mandatory change from the very start. In terms of a shift to impact investing, this will be very much driven by what the investors want from asset management. As an industry it is tough to say whether or not everyone will become an impact investor, however what we can say is that people will be more deliberate and thoughtful in their investing. To shift the notion of profit over purpose, will be a challenge. How key is ESG investing to a low carbon future? Around a quarter to a third of UK’s GDP is flowing through London. Being able to redirect that towards companies striving towards net-zero, can only mean that things are getting better. Outrage and optimism a podcast, I listen to, is a dichotomy of pulling at the same string and I find myself in between outrage and optimism on progress with climate change. Personally, things should have changed 5 years ago based on the research I’ve read. How hopeful are you for the future of sustainable investing do you think enough is being done currently? How can we generate more demand from large investors into this area? The sooner we can get away from the term ESG investing and thereby making it look different to traditional investing the better our chances will be. Previously, it was believed you would sacrifice alpha when investing with an ESG lens. I think once we get to a stage that these are the norms and these are the ways we need to think about investing, critically analysing
Pras Gengatharan
companies on what they do to the environment etcetera, the better off we will be. It is a purpose and a numbers game, you must keep it in balance. What are the key challenges you’re faced with within sustainable investing right now? Do these change the metrics you use to measure success, with sustainability being so inherently hard to value? My assessment is that asset managers are split on this. Some started their journey a long time ago, whereas others are just getting started. One of the key observations is the need for authentic ESG integration; cultural changes are required, leading from the top rather than updating frameworks and shiny reports. Personally, benchmarking against competitors is an incredibly useful tool - close competitors and those you should be striving towards outside of your industry e.g. for an asset manager, pension funds and big banks. In my experience, we have found that it gave companies and ourselves better clarity on where the market is and where it needs to be. How do you find attitudes towards your role at Deloitte? Is it quite well integrated in the business or do you feel it’s still a bit of an add on and ‘new’? My role sits within the Sustainability function in Risk Advisory. For Deloitte, this has been a huge growth area. Other parts of the business often ask my team for insights to service their client books and to understand what the advice is for a successful adoption of ESG principles. In recruitment, a lot of ESG specialists are getting snapped up by firms at the moment, demand outstrips supply. Competition is fierce and I believe Deloitte is one of the better destinations for graduates interested in this area.
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Finally it would be great to know a bit more about your journey from your studies to the role you’re in now? In hindsight would you have done anything differently? We’d also love to hear some advice you’d give to graduates trying to break into the industry in such a challenging time? I studied computing and business at university, by the time I got into my final year I realised I didn’t want to do that anymore. Instead, I wanted to get into investment management, with my first job being at a small treasury house which I then used to work my way into a large US bank. Once I joined, I progressed quickly into the front office, the heart of the all the action. The experience was extraordinary, being surrounded by so many smart people with differing ideas, changing my world view rapidly. This gave me the confidence to diversify in my career and Deloitte offered me something other Asset Managers couldn’t, access to 400+ clients in industry keen to implement sustainability. Very early on for me it became clear that I needed guidance and a mentor. I always say that I don’t want to be the smartest person in a room, hence my preference to seek experienced opinions and career advice. I felt obliged to pay this forward too. To this day, I still have a few mentees, guiding them through their career journeys, which is just as important as being a mentee myself. 1.Perhaps, I would have liked to have studied something different at university: English Literature or History. Now as a fully functioning adult that’s what interests me more. Second, to that I think I would have asked myself if I was too comfortable in my career a lot more.
At my previous company, a very senior mentor would always commit to a complete upheaval of his career every 5 years: am I happy? Do I see family enough? Is it going as well as I thought it would go? Am I getting paid enough? If the majority of answers to these questions were no, he would commit to change. 2.Firstly, the industry is moving fast. People with the right qualifications and background are getting snapped up. Position yourself well by studying the right things and incorporate what you want to do in your career in your studies where possible. The vast majority of qualifications are tick box exercises in my view. If you really want to learn, think about further study a few years after undergraduate study e.g. an MBA. I completed an MBA 10 years into my career allowing me to contextualise and implement into the office from day 1 when I returned. Another tip would be talk to people. I genuinely think there are people that have trodden the paths you want to walk and although the success rate may not be high, those conversations you do have will be invaluable. For example, while I got a no it spurred me on. During university, I wanted to interview a leader for a university project, so I contacted David Miliband, he replied with a no and wished me good luck for the future. That itself spurred me on to keep going rather than to give up.
Pras Gengatharan
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Are green cryptocurrencies the future of finance?
The process of mining Bitcoin now uses more energy annually than the whole of Argentina, according to an ongoing study carried out by Cambridge University (Cambridge Centre for Alternative Finance, 2021), and as the demand for cryptocurrency is growing, so is the support for creating a greener, more sustainable alternative.
What is Bitcoin mining and why is it a sustainability issue? Bitcoin mining is the process of entering new bitcoins into circulation. Bitcoin miners solve complex mathematical problems using extremely powerful computers to verify transactions on Bitcoin’s blockchain to avoid fraud and “double spending”. As a reward, the first miner to solve the mathematical problems to verify a transaction is given new Bitcoin. This process uses such a large amount of energy because of the computational power required to solve these mathematical problems, with a majority of the problems being solved using trial and error. Financial economist for Digiconomist, Alex de Vries, reported that millions of Bitcoin computers around the world are generating 130 quintillion guesses to these problems every second (Clifford, 2021). According to Digiconomist, Bitcoin mining generates as much CO2 as New Zealand and consumes as much energy as Chile. The CO2 produced from processing and verifying one Bitcoin transaction is the equivalent to processing and verifying 722,705 Visa card transactions (Digiconomist, 2021). This also means that as Bitcoin prices increase, the more complex the mining process becomes, increasing the energy consumption of Bitcoin mining.
By Shivani Patel How are ESG considerations affecting Bitcoin in the markets? With increasing engagement with ESG investing due to concerns over climate change, the price volatility of Bitcoin has increased significantly. Bitcoin reached an all-time high of over 64,000 USD in April, however, in May, a series of tweets posted by Tesla CEO, Elon Musk, caused the beginning of a downward spiral for Bitcoin prices. On 12th May, Musk tweeted that Tesla would no longer be accepting Bitcoin as a form of payment, only two months after announcing Tesla’s acceptance of Bitcoin as payment. In his tweet, Musk said that they [Tesla] are “concerned about rapidly increasing use of fossil fuels for Bitcoin mining transactions, especially coal” and that cryptocurrencies have a promising future, but “this cannot come at great cost to the environment”. This one tweet alone caused a 15% drop in the price of Bitcoin. In the week following, over 250 billion USD was lost in the Bitcoin market (Browne, 2021), due to investors across the world pulling their investments out of Bitcoin. On May 24th another one of Musk’s tweets rocked the Bitcoin market when he announced that he had spoken with North American Bitcoin miners, who are “committed” to being transparent about their usage of renewables; this resulted in an increase of 17% in Bitcoin price. There was a further 8% spike in Bitcoin price on 13th June when Musk tweeted that Tesla would once again start accepting Bitcoin once miners start using clean, renewable energy sources to mine Bitcoin.
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Figure 1: Bitcoin price index, illustrating exactly how Musk’s tweets between May 12th and June 11th impacted the price of Bitcoin (CoinMarketCap, 2021).
Carbon Taxes, Renewables & “Altcoins” One way of making Bitcoin, and cryptocurrency, greener is to impose carbon taxes. Carbon taxes could incentivise miners to become greener by either switching to mining methods that use renewables to reduce carbon emissions and energy usage or by making Bitcoin mining less attractive so that they stop altogether. However, carbon taxes could also do more harm than good. Miners could move operations to less regulated jurisdictions, and it would not be appropriate to apply cross border carbon taxes on cryptocurrencies before other, more polluting industries (Clifford, 2021). “Altcoins” such as Etherium, Litecoin and SolarCoin are (often greener) alternatives to Bitcoin). Litecoin is similar to Bitcoin but is considered greener because it is easier to mine and only takes a quarter of the time to produce. Instead of the complex computers needed to mine Bitcoin, Litecoin can be mined with standard computers that require significantly less energy to run (Smith, 2018). Solarcoin is almost the same, except it’s mined using solar power technology, encouraging the use of renewable energy as one Solarcoin is produced for every megawatthour generated (Brett, 2017).
Can crypto be made more sustainable? With the advancement of renewable energy technology, mining Bitcoin will become a greener process. This will happen through the increased usage of renewables to mine, causing the price of Bitcoin to increase in the markets as people would be more comfortable investing in a greener Bitcoin. On the other hand, increased taxes and regulations will mean fewer people will be mining Bitcoin, in which case the price of Bitcoin to fall as it’ll be easier to mine. If the latter scenario does occur, then it is likely that one of the
in which case the price of Bitcoin to fall as it’ll be easier to mine. If the latter scenario does occur, then it is likely that one of the “Altcoins” will replace Bitcoin as the leading cryptocurrency due to its greener nature. The future of Bitcoin is hard to predict but one thing is certain, if the process of mining Bitcoin doesn’t get more environmentally friendly, Bitcoin may not be able to recover its record highs. References \Cambridge Bitcoin Electricity Consumption Index (2021). [Online]. Available at: https://cbeci.org/ Clifford, C. (2021). China, Elon Musk raise alarm about bitcoin energy use: Here’s how it could be made more ‘green’. [Online]. Available at: https://www.cnbc.com/2021/06/30/china-musk-raise-alarm-on-bitcoinenergy-use-how-to-make-it-greener.html Digiconomist. (2021). Bitcoin Energy Consumption Index. [Online]. Available at: https://digiconomist.net/bitcoin-energy-consumption/ Musk, E. (2021). Tesla & Bitcoin. [Twitter]. 12/05. Available at: https://twitter.com/elonmusk/status/1392602041025843203 Browne, R. (2021), Bitcoin plunges 30% to $30,000 at one point inild session, recovers somewhat to $38,000. [Online]. Available at: https://www.cnbc.com/2021/05/19/bitcoin-btc-price-plunges-but-bottomcould-be-near-.html Musk, E. (2021). Spoke with North American Bitcoin miners. […] . [Twitter]. 24/05. Available at: https://twitter.com/elonmusk/status/1396914548167233537 Musk, E. (2021). This is inaccurate. Tesla only sold ~10% of holdings […]. [Twitter]. 13/06. Available at: https://twitter.com/elonmusk/status/1404132183254523905 Smith, R. (2018). Two sides of the coin: Litecoin Mining vs Bitcoin Mining. [Online]. Available at: https://coincentral.com/litecoin-mining-vs-bitcoinmining/ Brett, C. (2017). SolarCoin blockchain: earn your reward. [Online]. Available at: https://www.enterprisetimes.co.uk/2017/07/10/solarcoinblockchain/ Graph data from CoinMarketCap. Available at: https://coinmarketcap.com/currencies/bitcoin/
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By Kayil Hassan
Stop being so Shellfish
3 onshore gas plants, over 50 North Sea oil fields, and 63 million tons of CO2 emissions a year are what it took for the Royal Dutch Shell to face legal scrutiny over their unsustainable and high CO2 producing operations. In early May of this year, the environmental group Friends of Earth (FoE) accompanied by 17,000 Dutch citizens brought a case against Shell which challenged their carbon emissions and their unwillingness to adhere to activists’ demands for change. The court in the Netherlands ruled that the oil giant must reduce its CO2 emissions by 45% compared to 2019 levels by 2030 (BBC, 2021). Failure to do so could result in the company facing a large fine and further legal issues. This landmark case, struck oil for environmentalists, being the first in history to legally force an oil giant to change its long-term policies, adhere to the Paris climate accords. The unexpected verdict has created seismic shocks across the industry, with other oil and gas producers now fearful of similar reprimands.
The Rest of the Market However, now the smoke from the court hearing has cleared, many shareholders feel that the decision given by the Dutch court was unjust and was nothing more than an attempt to make a statement to the wider industry. Shell sits 7th in the rankings for CO2 emissions produced since 1995, trailing significantly behind US rivals such as Chevron and ExxonMobil who overall have produced 11 billion tonnes more within the last 40-50 years. This argument forms the basis for Shell’s appeal against the verdict, highlighting how other investor-owned companies are much more damaging than themselves. Moreover, their appeal also mentions that state-owned oil companies such as Aramco and Gazprom are doing little to reduce their carbon-emitting operations and
are facing little political pressure from European countries (Taylor & Watts, 2021). The company further suggests that if environmental activists such as FoE want to make real progress, they should be lobbying governments to change laws and policies across the sector and supporting the introduction of financial incentives instead of targeting individual companies.
Shell's Transition Shell launched its green transition with a $300 million forest plan in 2019 with the aim to offset the CO2 emissions produced in its oil extraction and refinery operations. In addition to reducing and counterbalancing its carbon emissions, Shell has divested its non-operating stake in the German oil refinery PCK Schwedt, with the transaction expected to close by the end of the year. In addition, Shell has also pledged $6 billion a year in green energy projects developing and promoting biofuels, electric car charging, and renewables. An example of this is the future acquisition of Ubitricity one of the EU’s largest electric car charging point networks (Shell, 2021). Shell claims this is part of their ambitions to shrink their worldwide refinery footprint and as Robin Mooldijk, Executive VP of manufacturing stated, “This is yet another milestone in our journey” (Shell, 2021). However, queries over Shell’s true intentions remain unclear. This is reflective in support amongst shareholders of the existing transition plan remains high however is lower than would usually be expected.
Summary The oil industry has enjoyed many years of limited regulation however they now face heavy criticism and are
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being held responsible for current and past actions. The top 20 oil companies have contributed to 20% of CO2 emissions since 1965 and Shell alone still produces 63 million tons in CO2 emissions per year (Statista, 2021). This is only a 25% decrease since 2008 and is a key factor for the exponential growth in demand for change. Moreover, with a likely appeal on the verdict to happen by the end of the year, many now argue that Shell remains unwilling to reduce its CO2 emissions. Nonetheless, the court case is a momentous step in the right direction, demonstrating society’s demand for change and its power to create it.
References BBC, 2021. Shell: Netherlands court orders oil giant to cut emissions. [Online] Available at: https://www.bbc.co.uk/news/world-europe-57257982 Hook, L., 2019. Shell launches $300m forest plan to offset carbon emissions. [Online] Available at: https://www.ft.com/content/bae6481a-59da-11e9-939a341f5ada9d40 Shell, 2021. SHELL AGREES TO BUY UBITRICITY, A LEADING PROVIDER OF ON-STREET CHARGING FOR ELECTRIC VEHICLES. [Online] Available at: https://www.shell.co.uk/media/2021-media-releases/shellagrees-to-buy-ubitricity-a-leading-provider-of-on-street-charging-forelectric-vehicles-evs.html Shell, 2021. Shell sells its minority shareholding in PCK Schwedt joint venture Refinery to Alcmene. [Online] Available at: https://www.shell.com/media/news-and-mediareleases/2021/shell-sells-its-minority-shareholding-in-pck-schwedt-jointventure-refinery-to-alcmene.html Statista, 2021. Direct Greenhouse gas emissions of Royal Dutch Shell globally from 2007 to 2020. [Online] Available at: https://www.statista.com/statistics/788448/ghg-emissionsemitted-by-shell/ Taylor, M. & Watts, J., 2021. Revealed: the 20 firms behinf a third of all carbon emissions. [Online] Available at: https://www.theguardian.com/environment/2019/oct/09/revealed-20firms-third-carbon-emissions Zack's Equity Research, 2021. Shell to Divest PCK Schwedt Refinery Stake to Alcmene. [Online] Available at: https://uk.finance.yahoo.com/news/shell-rds-divest-pckschwedt-154103720.html? guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_ referrer_sig=AQAAADD99BAKrWu96wM71neVLqItttOTzAoCsDibYItCGEUAU4m9uk8Au8VnCGRix9nftg3FDzJxVZ8z38TA5ykN GRT7WvzOpaWMcG
STOP BEING SO SHELLFISH | 24
FINANCE
Subsidisation driving or damaging electric vehicle stock prices? By Anya Corvesor With extreme weather events on the rise, our use of traditional vehicle fuels must be re-evaluated. Many car manufacturers have already developed their own electric vehicles, with others set to enter the market. However, the issue of high upfront costs in comparison to traditional vehicles fuelled by petrol or diesel undoubtedly remains as a deterrent for some potential buyers. The ever-looming threat of climate change and netzero targets has persuaded some countries to subsidise electric vehicles. Germany’s Ministry for Economy and Energy announced on the 8th of July that the grant of up to €9,000 for the purchase of electric vehicles below €40,000 was set to be extended until 2025 (Barrons, 2021). This extensive subsidy is designed to enable the average person to afford the switch to electric. The announcement of the continuation of this subsidy should cause a long-term increase in the stock prices of both Tesla and Volkswagen, two companies holding large electric car market shares in Europe. However, this support for the EV market is not offered across the continent with the UK government having recently reduced their subsidy to a maximum of £2500/ €2948 (Gov.UK, 2021) and Belgium having scrapped theirs completely. In theory, this should create negative pressure on the stock prices, conflicting with the increased demand caused by the German government.
Consequently, it is still uncertain as to whether these incentives actively increase electric vehicle demand, yet this remains the policy most widely used to encourage the switch (Whitehead, Washington & Franklin, 2019). However, in the
UK market where cuts have occurred to the offered subsidy electric cars continue to make up a growing proportion of the UK’s auto market, currently sitting at 11% (Electrek, 2021). Whether the subsidy is in fact increasing these car companies’ profits is more complex than it may first appear. The subsidy is only granted to the company alongside the sale of an electric vehicle. This means that the producer is still receiving the same amount of money. Therefore, unless the subsidy is increasing the number of cars bought, profits will remain the same.
There are also other ways by which the subsidy can indirectly affect profit. In Europe, car manufacturers face possible fines if the fleet CO2 emissions average is above 95g/km (European Commission, 2020). Producers face a €95 fine for every gram of CO2 that exceeds their specific target, multiplied by the number of cars sold that year. Consequently, by increasing the number of electric vehicles this should reduce the average emissions for the leet. In doing so, the car manufacturers can avoid potentially large fines protecting their profits, potentially increasing their stock prices. These targets are hard to meet, with Volkswagen, despite a relatively large proportion of their sales being electric, being fined €100 million for their 2020 fleet average rising above the target by 0.5grams (Bloomberg, 2021).
SUBSIDISATION ON EV STOCK PRICES | 25
FINANCE
The question is, will these subsidies increase investors’ interest in the electric vehicle sector as the profits of electric car manufacturers continue to grow? Perhaps subsidies are having no significant effect and it is the increasing price of fuel that is causing the shift. For some people it may even be the faster acceleration due to not having a traditional engine, that is possible with electric cars that is driving up demand. Electric vehicles, and the temptation to purchase one is certainly becoming hard to ignore. References Whitehead, J, Washington, S, Franklin, J, 2019, ‘The Impact of Different Incentive Policies on Hybrid Electric Vehicle Demand and Price: An International Comparison’, World Electric Vehicle Journal, Vol. 10, no. 2 European Environment Agency, 2020, New registrations of electric vehicles in Europe, viewed 09/08/2021, https://www.eea.europa.eu/dataand-maps/indicators/proportion-of-vehicle-fleet-meeting-5/assessment Denton, J, 2021, Tesla Stock and Volkswagen Should Get Boosted by This Electric-Vehicle Subsidy Extension. Here’s How., Barron’s, viewed 06/08/2021, https://www.barrons.com/articles/tesla-stock-and-volkswagenshould-get-boosted-by-this-electric-vehicle-subsidy-extension-heres-how51626106152 Rauwald, C, 2021, VW Faces Small Fine After Missing Europe CO2 Emissions Target, Bloomberg Green, viewed 09/08/2021, https://www.bloomberg.com/news/articles/2021-01-21/vw-faces-small-fineafter-missing-europe-co2-emissions-target Lewis, M, 2021, EGEB: UK sales of EVs jumped to 11K in June, 1 in 10 now electric, Electrek, viewed 07/08/2021, https://electrek.co/2021/07/05/egebuk-sales-of-evs-jumped-to-11k-in-june-1-in-10-now-electric/ European Commission, 2020, CO₂ emission performance standards for cars and vans, viewed 02/08/2021, https://ec.europa.eu/clima/policies/transport/vehicles/regulation_en GOV.UK, Low-emission vehicles eligible for a plug-in grant, viewed 09/08/2021, https://www.gov.uk/plug-in-car-van-grants
SUBSIDISATION ON EV STOCK PRICES | 26
INNOVATION
P2P - The Future
P2P Energy Trading: Making the Most of our Renewable Energy ALSO IN THIS SECTION
by Oliver Jeffries
33
Ready or not? The electric infrastructure race has begun!
35
Old Dog New Tricks: the Future of Renewable Wind Energy?
FEATURED
INNOVATION
P2P ENERGY TRADING MAKING THE MOST OF OUR RENEWABLE ENERGY BY OLIVER JEFFRIES
According to the IEA (2021) global CO2 emissions rebounded by 5% as parts of the globe reopen as covid restrictions ease. This year energy-related CO2 emissions are projected to grow by 4.8% as demand for non-renewables increases following economic recovery. The trade-off between the environment and the economy is greater than ever before. Wind farms are integral to renewable energy. In 2020, £11.2bn was invested into wind farms in the UK (Mavrokefalidis 2021), however, their appeal is questionable. Can they win public approval in the fight against fossil fuels? Although the capacity of wind energy is expected to continue increasing, current wind farms must be upgraded if targets are to be met (Porte-Agel et al. 2019). Therefore, wind energy is still a promising alternative to non-renewables – but requires significant innovation. The technology works with existing grid infrastructure to allow the trading of renewable electricity between homes, ideally, cutting out the middleman of utility providers. P2P energy trading utilises Blockchain technology, a form of electronic ledger, like that used in cryptocurrencies. Blockchain facilitates the monitoring and recording of all transactions within a network, allowing for the secure, decentralised, cost-effective management and tracking of transactions. Transactions are made over a publicly available market where listings of leftover renewable energy are made and then purchased by other consumers. As shown by figure one, current energy distribution systems operate with a central utility provider who is paid a monthly tariff by consumers. Any unused energy can then be sold back to the utility company at a ‘buy-back rate’. However, it's worth noting that the ‘buy-back rate’ is far less than the cost of the energy originally incurred by consumers. Figure two illustrates the P2P system. Instead of stretching electrical wire and poles over great distances from central hubs to residences, this system connects all homes directly, minimising the quantity of wire used. And with roughly 22% of current UK electricity bills being spent on wire maintenance, fewer wires mean less maintenance and highlights one of the key reasons P2P energy is so cost-saving.
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FEATURED
INNOVATION
Pilot Schemes Early pilot schemes for the P2P system show some encouraging results for this piece of innovation. Countries like Australia, Malaysia and the UK have all seen successful adaptations of the system implemented in their individual trials. Moreover, the positivity of this innovation can also be observed in its facilitation of some start-ups like Power Ledger. This Australian firm is valued at around $130 million and are considered one of the world’s leading P2P energy trading firms, with mini-grids and trading platforms in 28 locations across the globe. Their platform saved ‘an average of USD 424 (AUD 700) per year for its energy consumers on annual electricity bills and helped solar rooftop system owners double the savings they normally get from their solar plants (Kabessa, 2017)’.
Other Benefits
Not only does P2P energy trading make renewable energy more accessible but it also allows for better energy management overall. More specifically, during times of high energy demand, P2P energy trading allows energy managers to separate the self-sustained P2P communities into ‘mini-grids’, thus easing demand on the main grid. This additional benefit has even been proven in some of the aforementioned trials, specifically in Malaysia where the findings of their 2019 pilot reported that P2P energy trading can effectively reduce peak demand and grid congestion in the main grid. Resultantly, some firms now offer this service to main utility providers. Piclo, a P2P energy trading firm in the UK has signed up five of the six energy distribution operators in the UK to its Piclo Flex Platform. Allowing operators to flexibly alter the distribution of energy to specific areas based on their needs.
Areas for improvement
Nonetheless, like with any new innovative technology, potential concerns arise. Homes taking part in P2P trading do require a small amount of training to correctly manage their energy. As was the case in the Brixton ‘Energywise’ 2018 project, where low-income households learnt how to productively manage their energy to reduce the cost of their bills. It may be the case that current tariff-based energy subscriptions could retain some customers due to their ease of use. Incentivising consumers to become active managers of their own energy could prove to be a challenge.
Summary
The future success of P2P energy trading depends on a number of factors. Namely, the continued uptake of home solar panels in the UK. Although, this should not prove to be much of a challenge, with the UK ‘installing solar panels faster than any other European country’ . It also requires active management from consumers who are willing to move away from traditional forms of energy subscription. And finally, sufficient support from the government in making policies encouraging P2P energy trading and supporting further pilot schemes if necessary. These conditions would provide an optimum future for P2P energy, where this system overtakes utility companies as the dominant form of energy distribution.
P2P ENERGY TRADING: BRITISH ENERGY | 28
REFERENCES Anon, (n.d.). Malaysia’s 1st Pilot Run of Peer-to-Peer (P2P) Energy Trading – SEDA. [online] Available at: http://www.seda.gov.my/2020/11/malaysias1st-pilot-run-of-peer-to-peer-p2p-energy-trading/ [Accessed 23 Jul. 2021]. Greenmatch.co.uk. (2015). Solar Panels in the UK - How Popular are They? | GreenMatch. https://www.greenmatch.co.uk/blog/2015/08/how-popular-are-solar-panels-in-the-uk. [Accessed 2 Aug. 2021]. Investing.com UK. (n.d.). Powerledger - Power Ledger Price https://uk.investing.com/crypto/power-ledger [Accessed 27 Jul. 2021].
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[online]
[online]
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at:
Available
at:
Ofgem. (n.d.). Costs in your energy bill. [online] Available at: https://www.ofgem.gov.uk/information-consumers/energy-advice-households/costsyour-energy-bill [Accessed 23 Jul. 2021] PEER-TO-PEER ELECTRICITY TRADING INNOVATION LANDSCAPE BRIEF ABOUT IRENA. (n.d.). [online] https://irena.org/-/media/Files/IRENA/Agency/Publication/2020/Jul/IRENA_Peer-to-peer_trading_2020.pd [Accessed 1 Aug. 2021].
.
Available
Vaughan, A. (2018). Majority of UK public want to install solar panels, poll finds. [online] the Guardian. Available https://www.theguardian.com/money/2018/aug/20/majority-of-uk-public-want-to-install-solar-panels-poll-finds. [Accessed 23 Jul. 2021].
at:
at:
www.ukpowernetworks.co.uk. (n.d.). UK Power Networks - Brixton residents first in UK to trial smart “flexible energy” project. [online] Available at: https://www.ukpowernetworks.co.uk/internet/en/news-and-press/press-releases/Brixton-residents-first-in-UK-to-trial-smart-flexible-energyproject.html [Accessed 2 Aug. 2021].
SUBSIDISATION ON EV STOCK PRICES | 29
Q&A Ivo Degn Co-Founder Climate Farmers
Firstly, you say on your website that you believe the first step towards humans living in harmony with the planet is regenerative agriculture, can you explain more what you mean by this? To understand regenerative agriculture you must understand our really long term plan, which involves several steps. In history, we switched from nomadic to agricultural lifestyles and cleared nature to utilise agriculture. However, as humans nowadays are everywhere agriculture cannot occupy that land. The bigger picture of regenerative agriculture is that humans need to evolve to be the most beneficial component of the ecosystem rather than the most destructive. In a measurable way we are trying to contribute to 10% of Europe’s agricultural land being regenerative (1-2% currently), whereby regenerative agriculture practices actively restore soil quality, biodiversity, ecosystems health, water quality while producing sufficient food of high nutritional quality. How significant do you think regenerative agriculture is to a low carbon future? And how hopeful are you that we can reach a more widespread adoption of this system? Currently, agriculture used 1/3 of the worlds land mass, contributing to 2433% of global emissions. Typically, when we discuss agriculture it is simply food production, however this is a gross simplification. Fundamentally, it is about: biodiversity, clean water, food and heritage traditions. The impact of agriculture on society is much bigger than initially thought and this is often overlooked. It follows that regenerative agriculture has massive potential. There's a possibility it can feed the world.
It is dangerous to assume, if we continue what we are doing right now, it will be okay. The extreme weather we will face will hamper harvests massively, so if we continue on this path of not accounting for ecosystems and extreme weather we will die out. Regenerative agriculture is the only way where we store massive amounts of carbon in the ground and improve the resilience of ecosystem, or we simply won’t have a future. What are the main challenges you are facing right now in achieving your goals with regenerative agriculture? We at climate farmers have received an incredible amount of support. For my entire professional career, I have worked in social ventures and have never had this kind of support. At the same time we are moving way too slow for what is really needed. The public and private sector, is picking up regenerative agriculture fast. However, we are missing the infrastructure on how to transition large parts of agriculture to regenerative for large food suppliers. At climate farmers it is our mission to build the infrastructure. We are past the stage of building awareness and are now looking at how to actively develop infrastructure. There is huge potential here, however it could also be a meaningless bubble, requiring a lot of work to build a strong foundation, which must exist for there to be success. How do you find attitudes towards individuals hearing or potentially adopting your practice? Is there a positive response to what you are doing? Farmers are yearning for this. What’s happening today in agriculture is what we as society have chosen. The system we have created under subsidies and regulation forces farmers to apply the amount of pesticides and fertilisers to operate on the level of efficiency to meet demands of the market and
Ivo Degn
buyers. No farmer wants to destroy the soil or ecosystem, the system is forcing them. When we approach them now and improve the ecosystem it is well received, but economically there is a significant barrier. So, a lot of current technologies involved in agriculture aim to increase profits and productivity in farming, however the long-term effects are neglected. Can you tell us about any new innovative technologies which can help enhance global soil carbon? The big trend we are seeing in classic management agriculture has been precision agriculture using technology to maximise synthetic input efficiency. While this is great to reduce pesticides and fertilisers, it doesn’t solve the problem of causing no damage and improving the ecosystem. Further, for farmers it is very hard to get feedback on what is damaging e.g. in a wet year there will be more carbon capture than a dry year, meanwhile a farmer implements a new technology and it is unable to figure out whether it was the wet weather or the technology that lead to the carbon capture increase. New hand held devices allow farmers to measure soil carbon based on infrared technology to get that feedback in the moment rather than per annum. Another point of progress is remote sensing - used a lot for regenerative systems and conventional systems. The data obtained from satellites can inform where and when fertilisers. Data collection and feedback collection is key.
Q&A | 31
Why do you think agriculture is somewhat neglected when it comes to its green innovation being acknowledged by the media? Agriculture produces approximately the same amount of CO2 as Cars do, yet the likes of electric vehicles have a lot more following and momentum behind it. Partly, the answer is philosophical. There is a tendency to neglect what we are really based on and instead focus on technology. Drug developments are far more interesting for people than maintaining general health and for example the billionaire’s space race is testament to people’s desire for new developments rather than enhancing existing quality of life on earth. To a lot of people soil isn’t particularly interesting they are far more interested in technology and where that can take them. It would be great to know what motivated you to enter this area. Why specifically did you set-up Climate Farmers? There are some people who can never leave the countryside or can’t wait to get out. For me, I never really got used to not living on a farm. I was working in social impact for the last couple of years, which I loved doing, but at the same time there was always this question that we need to improve democracy and without solving climate this won’t even be a problem to solve. All the social impact ideas for the climate I was seeing were insufficient, so I began research on a meaningful level: construction, energy and agriculture are the key drivers of this. There is potential for agriculture to go carbon negative. If 100% of agricultural land was regenerative agriculture we would go back to preindustrial revolution levels of carbon in 5 years. In the beginning, we would talk to every expert and farmer we could talk to. Asking them how a relatively small company could have
an incredible impact, so we set out to ensure that when regenerative agriculture comes that it has the basis to be stable and to grow.
Ivo Degn
Q&A | 32
READY OR NOT? THE ELECTRIC INFRASTRUCTURE RACE HAS BEGUN! BY ARUN WILLIAM JAIN The clock is ticking for the UK to prepare itself to become the next hub of innovation in electrical vehicles, as fundamental infrastructure changes are still needed for the country to meet its own targets. In November 2020, a government scheme was introduced to reduce the country’s carbon footprint. In which the sale of new petrol and diesel cars will be prohibited from 2030, and by the year 2035, all new cars and vans must be fully zero transmission at the tailpipe. all these efforts are in the pursuit to reduce the carbon footprint to reach net-zero by 2050. As one of the major carbon-emitting sectors, the transport sector contributed to 27% of the UK’s greenhouse gas emissions in 2019, the largest of any sector (Department for Business, Energy & Industrial Strategy, 2021). Whilst this figure accounts for all forms of transportation within the domestic sector, road travel from any vehicle represents 91% of greenhouse gas emissions (Department for Transport, 2021). The scale of the challenge is evident, and electrification of the UK’s vehicle stock will be fundamental. However, this is only one part of the equation. Electric vehicles are thirsty creatures, and given their current range limitations, charging stations both privately and publicly will become crucial in the bid to change consumer habits and further encourage the positive movement towards renewables. A lack of charging points is the principal sticking point. Cited as the main reason for consumers having reservations over purchasing electric vehicles (OVO energy, 2017). Whilst the number of publicly available charging stations are increasing weekly, the rate at which we are adding additional stations may be of concern. It is estimated that £16.7bn will be necessary to get the UK up to speed (SMMT, 2020). What are the 3 most common places for a driver to recharge their vehicles? The home, workplace, and service stations. There is a necessity not only in increasing the number of publicly available stations but also in simplifying the options available to consumers at home. Navigating the myriad of options available to consumers remains a minefield. A quick online search produces thousands of possibilities of different iterations of charging points. Varying from their charging speed, capacity, source of power, and many other particulars, it can be daunting for the uninitiated to know where to start. With limited universality, as each company’s approach varies, home charging must be simplified to avoid scaring off new buyers. Elon Musk’s Tesla has begun to make this transition in making the process more accessible. Recently announcing that by September 2022, the company plans to open its Supercharger network to other automakers in Europe. Tesla’s current network is by far the most extensive worldwide, with an estimated 25,000 superchargers globally (Electrek, 2021). Previously exclusive for Tesla owners only, the move by the company could indicate a shift towards a more holistic approach and open the door for many. Of course, Tesla’s motives may not be completely philanthropic as the company would receive a commission from every company which utilises its network. However, the initiative would undoubtedly help achieve the goal of further electrification which is beneficial for us all. From research conducted on behalf of the government, it is estimated that the number of public chargers needed for ‘top-up charging’ needs to rise from 2,700 in 2016 to over 27,000 by 2030. In addition, nearly 29,000 charging points are needed across Great Britain by 2030, of which around 85% of these are fast (22 kW) or rapid (43+ kW) chargers (House of Commons Library,
THE ELECTRICAL INFRASTRUCTURE RACE | 33
REFERENCES
Hirst, D., Winnett, J., Hinson, S., (2021). Electric Vehicles and Infrastructure. [online] House of Commons Library. Available at https://researchbriefings.files.parliament.uk/documents/CBP-7480/CBP-7480.pdf/ [Accessed 27 July 2021] Department for Transport, Office for Low Emission Vehicles, Department for Business, Energy & Industrial Strategy., (2020). Government takes historic step towards net-zero with end of sale of new petrol and diesel cars by 2030. Gov.uk [online] Available at: https://www.gov.uk/government/news/government-takes-historic-step-towards-net-zero-with-end-of-sale-of-new-petrol-and-diesel-cars-by-2030 [Accessed 28 July 2021] Bornstein, J., Lillie, M. and Kube, L., (2021). EV charging: More speed, more positions, more power. [online] Deloitte United Kingdom. Available at: <https://www2.deloitte.com/uk/en/pages/energy-and-resources/articles/electric-vehicle-charge-points.html> [Accessed 28 July 2021]. Cenex, next greencar and Systra. (2018). Plugging the gap: An assessment of future demand for Britain’s electric vehicle public charging network. [online] The CCC. Available at https://www.theccc.org.uk/publication/plugging-gap-assessment-future-demand-britains-electric-vehicle-publiccharging-network/ [Accessed 28 July 2021] Kolodny, L., (2021). Elon Musk says Tesla Supercharger network will be open to other cars this year. [online] CNBC. Available at https://www.cnbc.com/2021/07/20/elon-musk-says-tesla-will-open-its-chargers-to-other-electric-vehicles.html [accessed 28 July 2021] https://www.ovoenergy.com/guides/energy-guides/ev-charging-speeds-explained-slow-fast-and-rapid Mostyn, M., (2021). Your complete guide to EV charging speeds: slow, fast, and rapid charging explained. [online] OVO Energy. Available at https://www.ovoenergy.com/guides/energy-guides/ev-charging-speeds-explained-slow-fast-and-rapid [accessed 28 July 2021] OVO Energy (2017). What’s stopping the ‘electric vehicle revolution’?. [online] OVO Energy. Available at https://www.ovoenergy.com/blog/ovonews/whats-stopping-the-electric-vehicle-revolution [accessed 28 July 2021] Lilly, C., (2021). Electric Car Market Statistics. [online] Next green car. Available at https://www.nextgreencar.com/electric-cars/statistics/ [accessed 29 July 2021] Department for Business, Energy & Industrial Strategy, (2021). 2019 UK Greenhouse Gas Emissions, Final Figures. [online] Department for Business, Energy & Industrial Strategy. Available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957887/2019_Final_greenhouse_gas_emissions_st atistical_release.pdf [accessed 29 July 2021] Department for Transport. (2021). Transport and Environment Statistics: 2021. [online] Department for Transport. Available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/984685/transport-and-environment-statistics2021.pdf [Accessed 29 July 2021] Lambert, F,. (2021). Tesla confirms plan to open Supercharger network to other automakers next year Norway capacity. [online] Electrek. Available at https://electrek.co/2021/06/24/tesla-confirms-plan-open-supercharger-network-other-automakersnext-year/ [Accessed 29 July 2021] https://www.statista.com/statistics/696548/number-of-electric-car-charging-stations-in-norway-by-type/ Statista. (2020). Number of public charging stations for electric cars in Norway from 2011 to August 11, 2020, by type. [online] Statista. Available at https://www.statista.com/statistics/696548/number-of-electric-car-charging-stations-in-norway-by-type/ [accessed 29 July 2021] Griffiths, H., (2020). UK needs £16.7bn electric car charging investment to hit 2035 goals. [online] Autoexpress. Available at https://www.autoexpress.co.uk/news/107387/uk-needs-ps167bn-electric-car-charging-investment-hit-2035goals#:~:text=An%20investment%20of%20%C2%A316.7,2035%2C%20according%20to%20fresh%20analysis [accessed 29 July 2021]
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OLD DOG NEW TRICKS: THE FUTURE OF RENEWABLE WIND ENERGY? BY BILLY GREEN
NOVEL START-UP ALPHA 311 IS LOOKING TO GENERATE LOCAL ELECTRICITY FROM WIND TURBINES, BUT NOT THE CONVENTIONAL ONES WE ARE ALL USED TO…
SO? WHAT’S THE PROBLEM?
According to the IEA (2021) global CO2 emissions rebounded by 5% as parts of the globe reopen as covid restrictions ease. This year energy-related CO2 emissions are projected to grow by 4.8% as demand for nonrenewables increases following economic recovery. The trade-off between the environment and the economy is greater than ever before. Wind farms are integral to renewable energy. In 2020, £11.2bn was invested into wind farms in the UK (Mavrokefalidis 2021), however, their appeal is questionable. Can they win public approval in the fight against fossil fuels? Although the capacity of wind energy is expected to continue increasing, current wind farms must be upgraded if targets are to be met (Porte-Agel et al. 2019). Therefore, wind energy is still a promising alternative to non-renewables – but requires significant innovation. A study by Krekel and Zerrahn (2017) showed turbines in Germany exhibited negative externalities on local residents. Conventional wind turbines bare costs onto third parties which are not taken into account in the economic decision-making of installing them. These externalities affect life satisfaction of those who reside near wind farms. These effects have an impact on those living within a 4000m radius of a wind turbine. Therefore, they’re unpopular in the eyes of the public. Yet, there does seem to be evidence of innovative solutions to current challenges. Research put forward by Porte-Agel et al. finds that vertical-axis wind turbines may lead to more innovative turbine placement to maximise efficiency in the future, addressing issues surrounding externalities and modernisation. A recent paper from the University of Illinois suggests plans for wind farms to work collectively in order to maximise performance and efficiency (Young 2021). Conventional wind farms allow individual turbines to maximise their own efficiency which is actually counter-productive.
A SOLUTION? ALPHA 311
Sifted’s Sustain 100 lays out the top 100 sustainable start-up companies across Europe, and there’s one UK-based startup revolutionising the wind energy game. Alpha 311, based in Kent, launched in mid-2020 and gives a promising outlook on the future of wind power (Pojuner 2021). In contrast to the traditional turbines which cause visual and noise pollution, Alpha 311’s vertical turbines are disguised to fit the surrounding environment. These can be embedded in lampposts, installed along motorways and railways, or placed on tall buildings in urban areas to create local energy efficiently.
HOW DOES IT WORK?
Alpha’s wind turbines are smaller, lighter and easier to install (Alpha 311, 2021). Due to this design, they can be installed almost anywhere; hidden in lampposts, installed on buildings or placed alongside motorways to rail tracks with the intention to spin when a vehicle goes rushing past. These things can spin even when there isn’t any natural wind. The energy produced from the rotation powers local appliances while feeding the surplus energy back into the grid.
THE FUTURE OF RENEWABLE WIND ENERGY | 35
Furthermore, their small compact design allows for installation at a lower cost than normal wind turbines. They may be small, but don’t underestimate their might… according to one engineer from Leeds University, one 2meter-tall turbine can produce as much energy as one 20square meter solar panel could in a field (Suda 2020). The same green energy can be produced at a fraction of the cost without taking up space that could otherwise be used for local agriculture.
1m2 Solar Panel
200 Watts
Alpha 311 Turbine
4000 Watts
Source: Alpha 311 (2021), Catlow (2021)
THE FUTURE OF WIND ENERGY Alpha 311 a great deal of promise in the field of wind power. Its innovative design holds the potential to revolutionise the renewable energy industry and change the way we think about wind turbines forever. As this start-up treads unchartered territory, it isn’t without its’ flaws – installing a motorway is a monumental challenge. However, the basis of their innovation is a great idea, their turbines are currently being tested on London’s Millennium Dome with 10 turbines going up. This is said to be enough to power the equivalent of 23 British homes (Williams 2021). The pilot scheme is to create enough energy to manage one of the O2 Arena’s restaurants and, if successful, Alpha 311’s project may be installed along streets and rail networks soon. It’s gratifying to see innovative solutions to energy problems right here in the UK. Alpha 311 is challenging the way we think about wind and is definitely a company to follow.
REFERENCES
Alpha 311 (2021) How Does It Work? [online]. Available at: https://alpha311.com (Accessed 5th August 2021). Catlow, Amy (2021) ‘How Much Electricity Can I Generate with Solar Panels?’, The Eco Experts [online]. Available at: https://www.theecoexperts.co.uk/solar-panels/how-much-electricity (Accessed 16th August 2021). IEA (2021) ‘Global Energy Review 2021’, Technical Report, International Energy Agency. Available at: https://www.iea.org/reports/global-energyreview-2021 (Accessed 1st August 2021). Krekel, Christian & Alexander Zerrahn (2017) ‘Does the Presence of Wind Turbines Have Negative Externalities for People in Their Surroundings? Evidence from Well-being Data’, Journal of Environmental Economics and Management, 82/1: 221-238. Available at: https://www-sciencedirectcom.ezproxy.nottingham.ac.uk/science/article/pii/S0095069616304624 (Accessed 3rd August 2021). Mavrokefalidis, Dimitris (2021) ‘UK Tops European Wind Energy Investment Ranking in 2020 with €13bn’, (14th April 2021), Energy News Live [online]. Available at: https://www.energylivenews.com/2021/04/14/uk-tops-european-windenergy-investment-ranking-in-2020-with-e13bn/ (Accessed 16th August 2021). Pojuner, Isabella (2021) ‘Introducing Sifted’s Sustain 100’, (25th March 2021), Sifted [online]. Available at: https://sifted.eu/articles/introducingsustain-100/ (Accessed 3rd August 2021). Porte-Agal, Fernando, Majid Bastankhah & Sina Shamsoddin (2019) ‘Wind-Turbine and Wind-Farm Flows: A Review’, Boundary-Layer Meteorology, 174/1: 1-59. Available at: https://link-springercom.ezproxy.nottingham.ac.uk/article/10.1007/s10546-019-00473-0#citeas (Accessed 1st August 2021). Suda, Jarrod (2020) ‘Meet the Start-Up Revolutionising Wind Power’, (24th June 2020), British Conservation Alliance [online]. Available at: https://www.bca.eco/bca-spotlight/u73ei93yj4npn0n80xrka9fexldjxu (Accessed 5th August 2021). Young, Chris (2021) ‘AI Moves Wind Farms Collectively to Improve Performance’, (29th June 2021), Interesting Engineering [online]. Available at: https://interestingengineering.com/ai-moves-wind-farmscollectively-to-improve-performance (Accessed 1st August 2021).
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Sustainable Business Review, 2020. Published September 2021.