Tuesday, January 29, 2013

The Green Deal - is it any good?



The Green Deal launched this week in a blaze of publicity, unfortunately much of it negative. The scheme has been the Conservative’s flagship home energy efficiency policy since before they even came to power, so the big question is: is it any good? The short answer is that it’s good for some, but not for others.

At its heart the Green Deal is a loan scheme for energy efficiency and renewable energy measures, but rather than homeowners paying back the loan directly to the bank the repayments are made via a charge on their electricity bill. The two key innovations of the Green Deal are that the repayments should not exceed the anticipated savings on your energy bill (i.e. your bills will be lower afterwards, even with the loan repayments) and that the loan stays with the property rather than you (if you move the new owner takes over the repayments).

The Green Deal is an attempt to address one of the big problems with some energy efficiency and renewable energy measures. Upgrades such as solid wall insulation and solar panels are expensive – many people would struggle to raise the cash to pay for them and they may worry that they’ll move house before they’ve recouped the costs through lower energy bills. The Green Deal offers a solution by providing financing and a guarantee that you’ll pay less than you’ll save. For homes that need these kind of expensive measures the Green Deal looks like it could be a real success.

Recent press criticisms of the scheme have focused on the fact that only 5 people appear to have signed up for it and the high interest rates on Green Deal loans. These criticisms appear to be the result of teething problems: the tiny number of people signed up is because the scheme database isn’t ready yet rather than a lack of public interest, whilst a competitive market will presumably bring interest rates down in time.

The real problem with the Green Deal is that in their zeal to encourage high cost home energy measures the Government has lost sight of the fact that many homes still just require bread and butter measures such as loft and cavity wall insulation. The Green Deal and its sister ‘ECO’ subsidy scheme replace an obligation on energy suppliers called the Energy Efficiency Commitment, under which millions of cavity walls and lofts were insulated all over the country.

Getting insulation under the Energy Efficiency Commitment worked like this. You’d ring up your energy company who’d give you a quote for (subsidised) insulation. If you wanted to proceed a couple of men in a van would turn up at your house, assess the job and (assuming they didn’t find any problems) install the insulation. The cost would be a few hundred quid on a typical house and the outlay of your time fairly minimal. Compare that to the hoops you need to jumpthrough for the Green Deal, and the costs that will be loaded on to the job by assessors, management companies and finance providers.

The result is that anyone who can afford a few hundred quid to pay upfront for cavity wall and loft insulation would be barking mad to have it installed through the Green Deal. The real shame is that people are far less likely to do these basic insulation measures now that subsidised insulation is no longer available through the Energy Efficiency Commitment  – they’ll have to pay the full cost instead.

The other controversial element of the Green Deal is that it can be used to fund what I’d tend to call basic home maintenance measures, such as new boilers and double glazed windows. Picture a situation where you had a choice of buying or renting two identical houses, one where the owner had paid for the (modern) boiler and windows themselves and one where these were funded through the Green Deal. In that situation most people would want a discount on the price (or rent) to make up for the loan charges added onto the Green Deal home’s electricity bill. Bang goes the Green Deal advantage of the loan staying with the property.

Of course in reality you’ll rarely find two identical homes where you’ll be making a direct comparison, and in areas with busy housing markets this factor might be forgotten as buyers scrabble to secure a desirable property. But a Green Deal loan will be something you’ll need to declare when you’re selling or renting a home.

Maybe my discomfort with the Green Deal is a sign of me getting old – my first job involved dealing with Energy Efficiency Commitment funded insulation grants and energy saving lightbulbs – but my view is that the Government’s desire to get solid walls insulated and solar panels fitted has made them kill off one of the most successful energy saving schemes of recent decades. The Green Deal isn’t aiming to demolish our old solid walled housing stock and replace them with new houses; it’s trying to improve these (in many cases) lovely old buildings. It’s just a shame that the Government isn’t applying the same ‘improve the old’ logic to its successful home energy efficiency schemes.

Friday, June 22, 2012

Solar salvation for Rio climate woes?


See that shiny new smartphone in your hand - I had one of those 10 years ago.  Granted it was big, ugly, slow, buggy and furiously expensive, but at the time it was at the cutting edge of mobile technology.  Now of course smartphones are powerful, ubiquitous and above all cheap. This is largely thanks to continued technological advancement that’s made electronics cheaper and better year after year, a process known in the industry as Moore’s Law.

The reason I mention this is that the world desperately needs energy technologies that are following a similar ‘better, cheaper’ path.  The lack of any meaningful media coverage of the current Rio+20 conference is making a rather telling point -  the media and the world’s leaders are squarely focused on our economic woes. Environmental concerns are, it seems, yesterday’s news.  Against this harsh backdrop green energy will start having to pay its way in cold hard cash, rather than avoided external costs added in a cost-benefit analysis.

Into this space steps solar photovoltaic (electric) technology.  This technology’s most recent brush with the UK news has been through the Feed-in-Tariffs scheme.  This is (or was) a generous subsidy scheme to support the use of solar PV that was suddenly scaled back, much to distress of the solar industry and environmentalists alike.  The Government’s stated reasons for reducing the available subsidy was the falling cost of PV modules, which made an already generous payment over the top and unaffordable.  So what’s the real story?

Well, the internet is awash with suggestions that solar is following a Moore’s Law style path, and good sources seem to substantiate these claims.  Solar costs have been falling at an exponential rate for several years now and, assuming this trend continues, it will soon be price competitive with conventional fossil fuel power in sunnier parts of the world.  If this happens solar’s status as a green technology would become irrelevant: people will use it simply because it is cost effective to do so.

Of course solar is not a silver bullet to the world’s energy and climate woes.  Solar only produces power when and where the sun shines.  With electricity notoriously difficult to store and transport solar is only ever likely to be part of the picture, particularly in the UK where it would take an awful lot of cost reduction for solar to be competitive with fossil fuels in the north of the country.  And the cost of a solar installation doesn’t simply follow the cost of the panel – the man crawling round on your roof fitting the system would not be amused at the idea of his salary following a Moore’s Law style trajectory.

Nevertheless the solar story, and that of some other energy technologies, offers a little hope for the future in the otherwise grim environmental picture of 2012. The problem with the barrage of subsidies, taxes and economic instruments used (or not used) to prop up more expensive forms of low carbon energy is that they can be reversed. When the economic noose tightens politicians tend to focus on short term financial problems and lose sight of longer term environmental issues. The idea that green energy may become genuinely cheap might therefore offer some degree of environmental salvation in these uncertain economic times.   

Thursday, April 5, 2012

CLG Outlines How Local Authorities Might Share the Pain

‘With great power comes great responsibility’. Those of you who’ve seen Sami Rami’s 2002 Spiderman film may remember these warning words delivered by the web slinger’s uncle shortly before his unfortunate demise. The Government must have been watching, as similar sentiments are now being voiced through the Localism Act and via a follow on consultation from the Department of Communities and Local Government (CLG) entitled ‘Proposed policy statement for Part 2 of the Localism Act 2011’.

The Localism agenda brings a dramatic shift in power from central to local Government. Under the previous Government local authorities were assigned more and more mandatory responsibilities and performance indicators until they became little more than agencies for delivering central Government policies. Late in the day the Labour Government began to reverse this trend and devolve more powers to local authorities, a process accelerated under the Localism agenda of the current coalition Government.

But this devolution of power creates something of a headache for the Government. Implementation of many international, and in particular EU, responsibilities often needs measures to be actioned at a local level. Localism means that central Government can’t simply tell local authorities what to do; so how can they make sure local authorities pull their weight?

The Government’s solution to this quandary is a provision in the Localism Act that lets them pass any fines received for non-implementation of EU law onto local authorities if they are judged to be not pulling their weight. Although the UK has never been fined by the EU in this way (a process known as infraction) other counties have and the fines can be very serious. In a French fishing case the fine amounted to a €20m lump sum and an additional €58m every six months until the case was resolved.

The first policy area where this provision may impact is air quality. The UK’s failure to meet legally binding EU limit values for the pollutant nitrogen dioxide have been well documented. Infraction action by the European Commission may start this year and could ultimately end with large fines being levied against the UK Government.

Local authorities, through the Local Government Association, have vehemently opposed this element of the Localism Act and continue to oppose its implementation. From an external observer’s perspective though the broad thrust of the argument makes sense – local authorities don’t have to do anything, but if they do not pull their weight they’ll share the pain inflicted by the European Courts. The real concerns then lie in implementation, namely will the process by fair and practicable.

This is what CLG have tried to answer in the current consultation, which sets out the proposed process for sharing the fines. Core to the process is a policy of ‘transparency and no surprises’. This involves the Government working closely in partnership with local authorities around the establishment and implementation of EU law and, crucially, does not seek to punish local authorities for (lack of) action prior to the establishment of the Localism Act.

The process of sharing fines would begin with the European Commission issuing a ‘reasoned opinion’ against the UK, the second step in the infraction process. At this point the Government would apply for a ‘designation order’ which would detail the authorities involved, the specific infraction case and the activities (powers and services) of the local authority covered by the case.

Crucially it would only be the actions (or inactions) of the local authority after the designation order had been served that would be considered in the sharing of any fines received. Essentially the designation order tells the local authority that there’s a problem and their assistance is needed to resolve it. This process would appear then to address the first concern, that the process be fair.

The consultation document then sets out the proposed process to be followed if infraction action continues to the stage of fines being levied Here an independent panel would be set up to investigate the case and hear representations from all interested parties. The panel would advise relevant Ministers who would have the final decision on the share of the fine to be levied against each of the local authorities involved.

But is this process practicable? In complex cases such as air quality it would be very difficult to judge responsibility. The Government could, for example, suggest that a local authority should have set up Low Emission Zones to drive down pollutant emissions. However the local authority could counter that in the absence of a national Low Emissions Framework (used in countries like Germany) it would be far too complex and expensive to do so. In short the web of blame and counter blame would be extremely difficult for the independent panel to unpick.

The basic facts of the air quality case though are that measures by local authorities are essential in order to provide clean, healthy air in our towns and cities, and the current Local Air Quality Management framework has not been effective in uniformly driving action across the country. Whilst there’s a big question mark over whether passing on fines is practicable it could, potentially, shake the laggard local authorities into action. But together with this ‘stick’ we also need a ‘carrot’. Could this function be filled by the new public health powers being devolved to local authorities?

The CLG consultation runs until the 22nd April, click here to see the consultation document.

Thursday, February 23, 2012

2011 UK Energy Figures – Oil and Gas Production Plummet but Low Carbon Generation Grows

Provisional 2011 UK energy figures have been released today by the Department of Energy and Climate Change (DECC). Conventional energy gives little cause for cheer with the news that the production decline in North Sea oil and gas has accelerated. On the positive side low carbon electricity generation has climbed, whilst total energy consumption had continued on its declining trend.

The energy consumption figures probably give most hope for environmentalists. UK energy demand has been falling now for over 5 years, although the economic downturn has done much to drive this trend. DECC’s figures show 2011 total energy demand was down a whopping 7% from 2010, however much of this was thought to be due to the mild weather and on a temperature adjusted basis the figure was a more modest (but still significant) 2%.

Low carbon generation also provided some good news. Wind’s share of generation by major power producers has grown from 2.4% to 4.0% since 2010 due to greater capacity and windier weather. Hydro is also up from 0.8% to 1.5%, largely due to more rainfall in Scotland where the majority of UK hydro is installed. These figures are dwarfed though by the low carbon king - nuclear generation - which accounts for 20% of UK electricity generation.

Conventional energy gave little cause for cheer though. Petroleum production was down by 17%, whilst gas production was down by an even greater 20%. Maintenance shutdowns, as well as general production decline, was behind these worrying figures. As a result the UK is becoming more and more reliant on energy imports, with Liquefied Natural Gas (LNG) shipped in from Qatar now at similar levels to pipeline gas from Norway.

Recent announcements that huge quantities of unconventional gas are lying under the UK will be welcome news then to the Government. But developing these resources via ‘fracking’ technology has a number of technical, regulatory, and (not least) public relations hurdles to jump, and it will be several years at least before significant quantities of gas begin to flow. In the mean time the UK looks set to be increasingly reliant on imported energy.

Friday, January 27, 2012

A Healthy Direction for Local Air Quality Management

With climate change hogging the headlines work on air quality in the UK can sometimes feel like a bit of a backwater. Major policy announcements are few and far between, so it's surprising that when a significant shift in air quality policy happens it slips out quietly rather than being shouted from the rooftops.

The policy shift in question was contained in the dry sounding 'Public health outcomes framework for England, 2013-2016’ released by the Department for Health earlier this week. To give a bit of background here the document supports the Government’s earlier decision to hand back public health responsibilities to local authorities. This will take place via the appointment of Directors of Public Health in English county and unitary level authorities, who will be provided with ring-fenced funding to support their work.

The new document sets down the indicators by which public health will be defined and measured. The indicators span 4 categories, and focus on the factors that cause ill health rather than the health ‘outputs’ (cancers, heart disease, etc) that we usually see in Government health targets. Air pollution tops the list in the 3rd category of indicators, those concerned with protecting the public from ‘major incidents and other threats, while reducing health inequalities’.

The definition of the air quality indicator is given as ‘the mortality effect of anthropogenic particulate air pollution (measured as fine particulate matter, PM2.5 ) per 100,000 population’. This will be expressed as both attributable deaths (premature deaths) and years of life lost associated with these attributable deaths. A new body, Public Health England, will crunch the numbers to produce the indicator.

The inclusion of this indicator has two quite fundamental repercussions for how air quality is managed in England. The first and most obvious is the extra resources it will bring to local action on air quality. Local authorities in England currently work on air quality management through the mandatory Local Air Quality Management (LAQM) regime. Based in district/ borough level authorities LAQM has proved very good at identifying areas of high pollution but much less effective at doing anything about them, a situation exacerbated by chronic under-resourcing in many local authorities.

The inclusion of air quality in the new outcomes framework promises to change that. Not only will it bring new financial resources to efforts to improve air quality, but by highlighting the health impacts of air pollution it will end the befuddlement of local authority elected members by talk of micrograms of pollution, sources and receptors. Instead they’ll be provided with hard numbers for the health impacts of air pollution on the public in their area – a far more powerful figure to draw a compelling case for action.

This leads nicely on to the second repercussion of the new indicator. Air quality management in the UK is currently focused on the ‘input’, or the concentration of the pollutants in the air. The system is drawn from EU rules, which instantly alienate the UK’s Eurosceptic majority, and exists in a bubble of scientific language which confuses 90% of the rest. The new indicators suggest a move (at the local level at least) to focusing on the ‘health output’, or the impact of air pollution on people’s health.

There are of course some questions that need to be answered before the new system comes into effect. The obvious one is whether the current system of LAQM continues alongside work on the new health based indicator. Whist a twin track approach is potentially wasteful, the new indicator has a narrow focus on the pollutant PM2.5 only and some system of management for other pollutants is therefore essential.

The other obvious question is how a local air quality management system focused on health outcomes is married to a national system that is still rooted in pollutant concentrations. The national system of air quality management is based on the requirement to meet EU rules, and it is unlikely that these are going to change to a system based on health outcomes anytime soon.

However, whilst there’s still work to do air quality professionals should be celebrating a quiet victory here, one that no doubt involved some significant lobbying of the Department of Health by other branches of Government. We can look forward to a future where not only is there likely to be more local resources dedicated to improving air quality but also one where more people, including our elected representatives, understand that improving the quality of the air we breathe has enormous benefits to our health.

Tuesday, January 10, 2012

A High Speed Future or an Expensive White Elephant?

So High Speed 2 (HS2) has been approved. Come 2026 we’ll be able to travel from London to Birmingham on fast, punctual services with the promise of high speed extensions to Leeds and Manchester to come. The media is full of contrasting opinions on this development, with some proclaiming the benefits of a sorely needed new line and others deriding the project as an expensive and environmentally damaging white elephant. So who’s right?

If you’re pressed for time the simple answer is ‘who knows?’, but if you’re after a bit more of an analysis read on. The arguments for HS2 rest largely on its abilities to reduce journey times and increase capacity on the UK’s railways. The first of these arguments is the best known due to the impressive 225 mph planned top speed for the line – that’s a good 100 mph faster than current West Coast Main Line (WCML) that HS2 will mirror. But, whilst impressive, speed is not necessarily a benefit in itself.

The first reason why faster may not be necessarily (much) better is the geography of our country. The well respected Eddington Transport Study back in 2006 pointed out that when compared to countries such as France and China (which the UK’s train network are often compared to) the UK’s main cities are much closer together. If you’re travelling long distances in these countries then the time savings produced by high speed rail may be hours, but if you’re travelling from London to Birmingham or beyond the time savings from HS2 will be measured in minutes.

The analysis supporting HS2 suggests though that these saved minutes are highly valuable, mainly through the assumption that people making business journeys are largely unproductive whilst travelling. This is the area where objectors to HS2 have perhaps their strongest argument – if you’ve been of a train of late you’ll have undoubtedly noticed that people tend to work whilst travelling. I regularly make the hour long journey from my home in Brighton to London, a trip just long enough to have a sandwich and make plans for the meeting I’m travelling to. If the train took half the time I’d just need to do some of this planning before I left.

If the time saving case is dubious the capacity argument is far more compelling. Passenger miles on the UK’s rail network have been growing strongly since the mid 1990s. The WCML is one of the UK’s busiest railways and on current rates of passenger growth it will be full to capacity within a matter of years. HS2 addresses this issue and also has spill over capacity benefits for the rest of the network. As most passengers travelling between the major cities on the route will take HS2 the existing WCML will be freed up for local journeys, freight and east-west journeys across the network. These are all currently restricted due to the need to focus on the north-south express services.

However HS2 will be colossally expensive, with construction of the full Y shaped network to Leeds and Manchester estimated to come in at a cool £32.7 billion at today’s prices. Fare revenues are expected to be £34 billion over a 60 year period, and, as that revenue will need to cover operating costs too, there’s clearly a big gap that will need to be covered by the taxpayer. So to prove the project will be beneficial to the UK, and therefore deserve that huge subsidy, the analysis behind HS2 calculates the benefits it will bring us. And here’s where things get a bit silly.

Analysis of HS2 has tried to calculate the costs and benefits of the line over a 60 year period, which, to put it gently, is quite a long time. The chances of a forecaster accurately predicting how many people will want to travel between London and the north and the value of their trip on this time scale are vanishingly small. As the years roll forward correctly forecasting social, technological and economic changes that will impact on the viability of HS2 becomes impossible.

You’d think that officials at the Department for Transport are well aware of the shortcomings of forecasts on this sort of a timescale, but need some hard figures to justify the political decision to press ahead with HS2. There's a lovely story to illustrate this kind of position. When the (future) Nobel laureate Kenneth Arrow was a young statistician during the Second World War he discovered that month-long weather forecasts used by the army were completely useless. He warned his superiors against using them and received the response, ‘The Commanding General is well aware the forecasts are no good, however he needs them for planning purposes.’

So who knows if in 60 years time HS2 will be seen as a resounding success or an underused white elephant. On the balance of things it’s probably better for the Government to provide modern infrastructure that the country is seen to need at the present time, rather than sit on their hand due to the risk it won’t be fully utilised in an uncertain future.

What we do know though is that many people, particularly children and politicians, love a train set. I spent last weekend at the Museum of Childhood in London, where a friend’s 2 year old pumped endless 20p coins into a model railway whilst gleefully watching the circulating trains. You rather suspect that they’ll be several former Ministers for Transport with similar looks on their faces when HS2 starts operation in 2026.

Saturday, January 7, 2012

Good News is No News for Environmental Campaigns

Today the Mayor of London launched a ‘no idling’ campaign, designed to encourage drivers in the capital to switch of their engines when parked. The campaign features cleverly designed adverts urging drivers to help prevent asthma attacks and other undesirable health impacts by switching off their engines and reducing air pollution.

It’s a great promotion to see up and running, it’s just a shame they ‘key messages’ accompanying it almost immediately shoots the whole campaign in the foot. The briefing accompanying the campaign gives two key messages, the first of which proudly states 'London’s air quality is hugely better than it was 50 years ago but there’s still room for improvement'.

You’d be excused if you didn’t get past the first few words. Whilst the message that air quality is better now than it has been in the past is undoubtedly true it’s hardly a rousing call to action. Faced with a campaign that proclaims things are getting much better most members of the public would wonder what the point was of them paying much attention to this call to cut air pollution.

The ‘air pollution is much better than it was’ message is not just in use by the Mayor of London, and most of the documents that the UK Government releases on air pollution lead with the same message. Crowing about success of air quality management is perhaps only natural - telling people that the air they breathe is less toxic now than it was in the past speaks of Government success, whilst letting people know that the air in our towns and cities is harmful to their health stinks of complacency and failure. But it won’t do much to get the public behind measures to improve air quality.

The Government doesn’t always take this approach. Let’s take something that’s in the news rather a lot these days: public sector debt. If you judged this by media messages emanating from the Government you’d think that the national debt is at crisis point, the worst it’s ever been. The reality in fact is that the UK’s total national debt as a percentage of our economic output (as opposed to the annual budget deficit) is quite low by historical standards. But saying that doesn’t help the Government’s cause: if people weren’t convinced that debt was at crisis point they would be less willing to see cuts to public services.

Finding the correct message for environmental campaigns can be difficult. A softly softly approach can result in public indifference, but on the other hand trying to scare the public into action can just create an aura of helplessness. The doomsday messages pushed by climate campaigns in recent years have often fallen foul of this latter factor – if there’s only a handful of years left to save the world and big emitters such as the USA and China are indifferent then what’s the point of me insulating my loft and driving the car less?

This needn’t be the case with air quality though. Whilst the health impacts are pretty scary the solutions often lie in cutting local emissions through individual action. The Mayor’s anti-idling campaign actually provides a good template of how this can be done, effectively linking individual action on emissions to health improvement. But next time it might be better not to paint air quality as a success story before asking people to take action.