Published in The Scotsman, Friday, 12 September 2008
According to a recent optimistic New Scientist article, Silicon Valley venture capitalists estimate the future clean energy bonanza to be worth six trillion dollars – more than they anticipated for the dot com era.
Carbon markets within the financial sector are set to boom too. The value of carbon credits and trading doubled in size to $64bn in 2007, and this exponential growth is set to continue as trading regimes are established worldwide.
With Scotland on the verge of legislating Europe’s most stringent carbon reduction target, the Climate Change Bill, Scottish businesses will be expected to stand up and be counted. And with extreme weather affecting agriculture and infrastructure, the cost of oil reaching all time highs and consumer-facing brands under an ever brighter environmental spotlight, the pressures to act have never been greater.
Over the next few days, we will look into the opportunities offered by clean technology and carbon markets. We will ask leading Scottish businesses how changing laws, expectations and weather are affecting the ways that they are run, and the ways that we consume.
The stories will consider what climate change means for the Scottish people, as employees, business owners and consumers.
There are many strong, and some subtle, pushes and pulls on businesses to act on climate change.
Firstly, it’s important to get a feel for where legislation is taking us, as a direction of travel – businesses work best when the goal posts are set firmly and they can plan ahead effectively.
Although Scotland emits only a fifth of a percent of global greenhouse gases, it is in the fortunate position of having one of the best clean energy resources in Europe. The Scottish government has set itself a long-term objective of an 80% cut in greenhouse gases, by 2050. This will help meet UK-wide targets and international targets under EU Directives and the Kyoto Protocol. The forthcoming Climate Bill, to be considered by the Scottish Parliament, this year, will enshrine this trajectory in law. This is to be applauded, as it would be the most ambitious legally binding target of any country in the world. Importantly, the Bill is set to include the requirement for regular carbon budgeting and reporting, so the government will be held accountable for meeting the target.
Our first staging post on this low-carbon journey is 2010 – a target of 20% greenhouse reduction from 1990 levels.
How are we doing? The last published statistics are for 2005, which show we emitted approximately 55 million tonnes of carbon dioxide (‘equivalents’ as they include the warming impacts of other, more potent, but less abundantly produced gases, including methane and nitrous oxides). By this point, Scotland had reduced its emissions by over 15% from 1990, due largely to a shift away from heavy manufacture. A lag on the publishing of greenhouse gas statistics, however, means we do not know what has happened since 2005.
When there is talk of climate change and carbon, there is an almost audible sigh of relief that clean technologies can solve the problem.
With Scotland preparing to lose 70% of its electricity generating capacity from large power stations within 20 years, and an expected rise in demand of up to 50% by 2050 (according to the Royal Society of Edinburgh), the need for secure, as well as clean, energy solutions could not come soon enough.
The UK has created the framework for growth in its renewable energy industries. Through negotiation in Brussels, an agreement has been reached to source 20% of EU’s total energy, electricity, heat and transport, from renewable sources by 2020. The proposed UK target will require a tenfold increase from its current capacity of 1.5% of renewable energy. The roads should be paved with springy green turf.
Even with the recent hikes in oil prices making renewable options more competitive, industry sources consider these targets as ‘extremely challenging’, but remain cautiously optimistic that the government will deliver the necessary policies and incentives. However, each renewable industry has its own set of advantages, potential, constraints and barriers. So, how much could these renewable industries be worth to Scotland, and how many jobs could they create? These are questions we will also be considering tomorrow.
Increasingly, legislators are stimulating markets for pollution credits to allow business to find the most economic response to emissions reduction. Currently, the carbon buzz and action is in London, which is emerging as one of the world’s leading hubs for trading and associated services. As far as carbon is concerned, geography is irrelevant. Could Scotland mount a challenging alternative? Tomorrow’s article will consider this possibility, and include the perspectives of Scotland’s leading banks.
Businesses who sell direct to consumers are under the environmental spotlight of consumers like never before. In vying for the attention of the switched on consumer, businesses must ensure their green credentials are sufficiently robust, and stand out. For example, leading consumer businesses are now carbon footprinting their products. What next? CO2 emission levels on our shopping bills? As we become more switched on as consumers, and the scientific case becomes undisputable, climate culture is changing. How is this affecting businesses and what they offer? A number of leading businesses and organisations will give their perspectives, including Diageo, Scottish and Newcastle and First Group. These will be discussed in our third article, on Monday.
There is a consensus in most scientific quarters that a global temperature rise of at least 2 degrees is inevitable by 2080, even if we made dramatic emission reductions immediately – due to the long life of greenhouse gases we have already sent skywards. This will mean big changes on the ground. In Scotland, we are due for an increase in extreme weather events, less snowfall and shifts in habitats and species. Adapting at the front line of these impacts will be farmers and food producers, water utilities, engineers and developers. The insurance industry will be dealing with the inevitable consequences too. We’ll hear the views of Scottish Water and Greenvale potatoes, who are the frontline of adaptation, in Monday’s article.
So, which Scottish businesses are set to take advantage from the low-carbon future, and how are our major businesses prepared? And which organisations are working at the coal face of decarbonising our economy, helping to make this happen? Tuesday’s, final article will summarise what we have discovered through the series, and offer some thoughts on what we can do, as individuals, to influence the climate future.
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