Low carbon economy: Pressure on politicians and Paris to create long-term certainty
TheBusinessDesk.com, in partnership with Drax and DLA Piper, has examined the challenges and opportunities that the low carbon economy presents for Yorkshire.
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MORE than 190 countries will gather in Paris over 12 days from November 30 to thrash out an agreement on climate change, which will be designed to reduce greenhouse gas emissions and limit global temperature increases.
However negotiating and implementing international agreements has proven to be problematic, whether it was at Rio de Janeiro in 1992 or any of the United Nations Climate Change Conferences, which have been held annually since 1995, including Kyoto in 1997 and Copenhagen in 2009. Will the 21st Conference of the Parties be different?
DLA Piper partner Teresa Hitchcock said: “I was hoping in Paris that instead of everyone being fixated just on targets that we get some joined up thinking and some longevity, which supercedes governmental politics in terms of who is going to be in next.
“When we have been lobbying about what should be talked about in Paris, that has been our big issue – how can we get certainty into this?”
However Jon Price, director of the Energy Innovation and Knowledge Exchange at the University of Sheffield, is not expecting there to be much achieved at the Paris conference.
He said: “I don’t think any discussions in Paris are going to make any difference whatsoever. I’m a veteran of years sitting around those tables and that’s not going to solve anything.”
He added: “For me it is all about 2050. If you are investing in plant you need to know what the energy mix is going to be in 2050, then it’s much easier to fund plant works, networks, whatever you need for the infrastructure.”
For politicians, the demands of the electroral cycle can push the very long-term and difficult-to-solve challenges of the energy sector down their list of priorities.
The investments of time and money that are required to significantly change how energy is created, managed and used mean that plans need to be made for years and decades at a time, rather than a matter of matter of months.
The effects of decisions made today will take years to be felt, reducing the incentive for politicians to make tough choices and search for solutions.
“We are talking about 30-40 year investments in new plant, they are talking about five-year, fixed term governments,” said Price. “Are politicians going to get elected by doing something on the health system or doing something on energy?
“At the moment they are fine because energy prices are low. But because energy prices are low, no-one is investing and if no-one is investing – well, if you look back at history, prices will shoot up in the future so the problem is around the corner.
“It’s going to come right back again, but for this administration I think they are absolutely fine. They don’t have to worry about energy costs because oil prices are probably not going to go back up to where it was before.”
With the UK general election out of the way, and with an majority government unexpectedly in power, there is the opportunity to put a clear strategy in place.
“There has been uncertainty on the political front,” said Russell Reading, structured contracts manager at GDF Suez. “If you have the certainty of environment that helps investment decisions and it helps move things forward in terms of moving to the end goal of a low carbon economy.”
In the meantime, he believes consumer demand will be the determining factor for how far and how quickly the move to low carbon will take place.
“At the end of the day, what is really happening is all of this cost and effort ends up with consumers, whether it is green taxation or whether it is levelisation or socialisation of the costs of subsidy, it ends up with the end consumer,” he said.
“That is probably where the main demand for the low carbon economy will really begin to work – if the end consumers, be they individuals or businesses, really want that and the market will hopefully work and find its level.
“We are beginning to see that people are demanding green energy, the market is responding to that and it works – the price is beginning to meet demand.”
But Hitchcock sounded a note of caution.
“There still isn’t joined-up thinking,” she said. “The gap is showing between expectation, certainty and what is actually in the market place and is available to deliver.
“Unless we get that thread of connection, no-one will want to be the first through the starting post – not the finishing post, but the starting post.”
