The business leader's guide to the low carbon economy

This week Environment Secretary Hilary Benn announced more government support for Anaerobic Digestion (AD) a process which essentially mimics the action of a cow’s stomach.  AD turns food waste and manure into methane gas, which can then be used for transport, local generation of heat and power, or even injected back into the national gas grid. The government is spending £10m to support a series of demonstration sites across the country.

A pilot plant in Ludlow, Shropshire, not only generates electricity, but also keeps waste food out of landfill, where it eventually decomposes into methane anyway. When released into the atmosphere methane is eight times as potent a greenhouse gas as CO2, as a contributor to global warming.

The UK currently operates 10 AD plants, with another 10 under construction.

The UK government announced this week that licences had been awarded for ten wave and tidal power projects off the coast of Scotland. Scottish First Minister Alex Salmond described the choppy Scottish waters as the ‘Saudi Arabia of marine energy.’ Hardly: when the six wave and four tidal projects are fully operational they’ll generate around 1.2GW of power, about the same as one average sized conventional power station. The 10 million barrels of oil which pours out of Saudi Arabia each day is enough to supply 1000 power stations. Even so, this investment in wave and tidal is significant, because the power it will provide is secure, low carbon and – if you exclude the huge capital costs – essentially free.

Unlike solar photovoltaic power, which is quite a high tech business, wave and tidal power is quite low tech. You just need to be able to weld together big chunks of metal that will withstand the battering of the violent Scottish seas, and find ways of turning movement into electricity. It should provide some good opportunities for engineering firms that were once involved in shipbuilding and the declining North Sea oil and gas industry.

A good rail network is an essential part of a low carbon economy. A train uses roughly a tenth of the energy of a car or plane to transport a given number of people a given distance. That’s why it’s shameful that the UK currently has only 100 km of high speed rail – from London to the Channel Tunnel – compared to France’s 1700 km or Japan’s 2500km. Though compared to the US, which has no high speed rail at all, we don’t look so bad.

Yesterday’s announcement by the curiously named Transport Secretary, Lord Adonis, may change all that. He says that if re-elected, a Labour government will begin construction of a new fast rail route – High Speed Two – from London to Birmingham in 2017, with possible future extensions to Leeds and Manchester. Conservative transport shadow Theresa Villiers responded by saying that if the Tories take the reigns of power in a few month’s time, they’ll begin building High Speed Two in 2015, all the way to Leeds and Manchester, with an extension to Scotland to follow.

More on High Speed Two

An interesting spat has broken out between eco warrior George Monbiot, and businessman Jeremy Leggett, founder and CEO of Solar Century, a company which produces solar panels for electricity and hot water.

The government recently announced that anyone who puts a solar photovoltaic (PV) panel on the roof of their house will be paid 41p for every kilowatt hour of electricity they produce – even if they use the electricity themselves. This subsidy, known as a feed in tariff or FIT is guaranteed for 25 years, making the purchase of a solar PV panel a very appealing investment. For an outlay of around £12,000, you can probably expect a guaranteed tax free return of about 5-8% a year. No other risk free investment on offer at the moment comes anywhere close to that.

It’s probably clear why Jeremy is a fan – his company makes solar panels. But why doesn’t George think much of it? According to Mr Monbiot, the scheme (a) won’t make much of a difference to the total amount of power generated by renewables (b) will generate power at the wrong time (in the UK we don’t use much power on sunny days – peak usage is dark winter evenings) and (c) will make the middle classes who can afford the upfront investment better off while doing nothing to address fuel poverty.

Of course he’s right on all three counts, but this won’t stop the government continuing with the scheme, and neither should it.  In a low carbon economy, most electricity will be generated from renewables and nuclear, and much of it will be generated locally rather than in big centralised power stations. The sooner we move to a low carbon economy the better, and that means trying a lot of things to see what works. Domestic photovoltaics may or may not be a significant source of Britain’s energy in 2020, when we have to reduce CO2 emissions by 34%, or by 2050, when we have to reduce them by 80%. But we won’t know unless we try, and that means getting started now.

For more about Monbiot and Leggett, see http://www.monbiot.com/ and http://www.jeremyleggett.net

The annual Geneva motor show is one of the big events in the petrolhead’s calendar, second only in importance to Detroit. Except that his year’s show is not quite the celebration of all things petrol driven as once it was: When Lotus, Ferrari and Porsche join Toyota, GM, Ford and Chrysler to showcase hybrid petrol-electric vehicles, you know that change is in the air.

According to Carlos Ghosn, Nissan/Renault’s boss, a hybrid is like a mermaid – if you want a fish, you get a woman: if you want a woman, you get a fish. Why not go all the way and build a completely electric car? That’s exactly what Nissan plans to do with the release of its all electric Leaf car.

OK, so batteries are currently heavy, expensive and don’t give you the range of a hybrid. But Nissan is working on these. Since the company began developing its lithium-ion batteries in 1992, it has increased their power density by a factor of ten, while reducing their cost by a factor of 16. And it’s partnering with an outfit called Better Place, to put a network of battery swap stations, initially in Denmark and Israel, and then throughout the world.

You can of course already buy an electric car. The Tesla Roadster gives you 0 – 60 in 3.9 seconds, a top speed of 125 mph and a range of 200 miles for £86,750. If you are content with a range of 50 miles and a top speed of 50mph the G-Wiz is a more modest £8000. But no one has yet produced an affordable mass market car. That will change with the launch of the Nissan Leaf in Japan and the US this December.

As mainstream manufacturers like Nissan get in on the act, prices will come down. Even if the upfront costs of an electric car are relatively high, the running costs are very low: The G Wiz, for example, costs about 1p per mile to drive – in running costs the equivalent of a petrol car that does 600 miles to the gallon.

As oil prices continue to rise, it’s likely that more manufacturers will, ahem, take a leaf out of Mr Ghosn’s book.