Energy and sustainability – there aren’t many more powerful issues on the planet right now. So what bigger or better focus on for our first ever roundtable? Our editor Richard Fidler gathered a group of industry leaders, led by UK sustainability partner Ameresco, to talk carbon awareness, emissions trading, and government intervention.
Speakers: Karthik Suresh (Ameresco), Kath Chapman (Ameresco), Nigel Davies (Muntons), Richard Fidler (unLTD), Sarah Blenkinsop (Golden Frog PR representing Samuel Grant Packaging) and Simon Johnstone (Aesseal)
What’s the biggest challenges facing the energy market today?
ND: Clearly energy saving but also carbon footprint, its water saving, and the energy associated with that. And the biggest change, I think, that we have seen in relation to energy is translating how to reduce the waste that we make, to how do we make money from waste which is generally making energy. We have seen quite a shift in that, in terms of our own interest and the funders who want to support it. Round about ten years ago they didn’t understand it, now they’re falling over each other to try and fund it.
SJ: Both from our point of view as a business but also looking at the country, I think some of the issues are going to be about uncertainty and having a bit of consistency, from government policy and a longer-term view would be helpful. A lot of these things change quite frequently and the focus changes, not necessarily with change of Government but also just over the period of Parliament. So, it makes it quite difficult when trying to make investment decisions.
SB: I think the challenge is a lack of understanding. So, certainly from a packaging point of view people are saying, you know plastic is bad? But actually, when you look at the amount of energy required to wrap something in plastic, if that plastic comes from a sensible source and is recyclable then that is a far more carbon effective way of wrapping the product as opposed to something that might be considered more sustainable. There’s an education piece around that and there is a big knee jerk reaction against plastic, especially in the past few years, which is quite ill-advised in my opinion.
KC: The glass sector is having a real resurgence from that backlash to plastic, but you use an enormous amount of both electricity and gas to make glass. So, it’s not that glass is particularly energy efficient it’s just that it’s benefiting from the backlash from people who don’t like plastic. Also, if you’re going to use recycled glass, you have to get people used to the fact that it’s not going to be as clear as the virgin product. It’s not that it’s dirty – it’s just not a virgin product.
KC: You’ve got generations coming through now where carbon is a criterion that they consider in their decision making. Whereas if you went back 20 years you wouldn’t have that. Nigel, do you get any pressure from your supply chains to demonstrate your carbon credentials?
ND: We do. I’ll give you an example recently: One of our customers went out to 50 of their suppliers, not just for malt, and they asked about carbon and we’ve got every bit of information you can possibly have. They said they got one reply, so we know which reply that was. Forty-nine people didn’t even know where to start when describing their activities in terms of carbon and I think this is a problem. We spend a lot of time demystifying that debate – you can make it really simple.
KC: If you look at the legislation that Government has brought in from April this year – which is something called the Streamline Energy and Carbon Reporting – you guys will be caught out by it because everyone is going to be caught by it unless you’re a micro business virtually. And that’s the Government’s way of trying to force people to calculate what their carbon is, and it goes in your annual report. The whole idea behind that is it makes carbon part of an investor’s decision-making criteria and it’s in the public domain.
How important is it for businesses to take control of how they spend on electricity or gas?
ND: Well, for us it’s very important. Its equivalent to our salaries and energy – they’re roughly the same sort of bills. We went to our supplier and said can you supply us with 100 per cent green electricity? Which they could and then we had the challenge of saying ok, you can do that, what’s the price saving? They say there isn’t one because the price that it is below the ground is exactly the same price as the levy exemption certificates they have to buy. And then because you’ve bought green, you don’t get the rebate on your climate change levy. So, it ends up costing you ten per cent more. So, we said right, we’re not interested in that. We’ll make our own green energy and that was the way it moved. We said, where’s our waste stream? We’ve got a brewery on site, let’s use the waste from that to generate methane, generate 14 per cent of our electricity on site which saves us £1.2 million.
KC: If you look at our carbon saving compared with our Kyoto protocol, we said we’d get to 80 per cent and we’re at 40 per cent. So, it would be easy to say oh happy days, we’re going to make it, but actually it’s the next 40 per cent that’s the really difficult 40 per cent to do. The first bit, the decarbonisation of electricity was relatively easy, and it hasn’t really involved massive change in people. But, to get to that 80 per cent, we’re going to have to make some much harder choices that involve the general population.
ND: If you look at that 40 per cent they reckon that 40 per cent of that has come via legislation, so therefore if you flip that figure it means that 60 per cent has come from people seeing the ability to invest and that’s a good thing. Whenever we get the chance to talk to Government, we remind them of that figure and say you do not need to keep legislating. It will have its part…
KC: But it doesn’t deliver the whole solution.
ND: No, and the trouble is they don’t invest those taxes that they get from green taxation. They don’t invest that back into green technology, which, love them or hate them, the Americans do and the South Koreans do, and we don’t and that’s where we miss a trick.
Sustainability: Business and PR Perspectives
SJ: The amount of work we do for sustainability gives us a unique selling point. Looking at packaging as well, not just from the energy side of things but the overall waste side of things. We’re always looking at not only where we can reduce waste, where we can be more efficient but also where we can make a real positive impact and a lot of that is with our customers. We do save about 25 billion U.S. gallons of water in industry per year, so we want to live what we say as well.
We are finding interest is changing not only from our customers, but internally as well, particularly from the younger people, that’s really picking up. We got 40 new apprentices this year and the level of interest from them compared to ten years ago is completely different. They’re much more interested in our carbon footprint, our waste and dealing with resources. And it does make a big difference, it makes us a much more attractive employer in the region.
SB: As a B2B, you might not be a household name but there’s nothing wrong with bragging about best practice in order to become more of one. Especially in your local community if you’re looking to attract younger people who have more of an ethical agenda when it comes to how companies operate in terms of their energy consumption and so on. There’s no reason not to be telling households what you’re doing because that does raise your profile and it’s a challenge to attract decent staff from the local community.
European Emissions Trading Scheme
ND: The EU said we were going to save 20 per cent under the European Emissions Trading Scheme, but the UK came back and said we’re going to lead and save 30 per cent by the year 2030 – without any idea what that was going to do to UK businesses. It does have a major impact. We flagged that up to them and said we have hit these carbon targets – we’ve hit yours and we’re going even further than that. But we are disadvantaged in the global markets so therefore it could well be that a lot of industries will go abroad, and they just said, well that’s fine because that sorts our carbon balance out.
KC: From an energy and decarbonisation perspective, the next big thing is going to be decarbonising gas. You can’t buy green gas unless you pay a significant premium, and the further out you go, the premium really ratchets up. So, what you pay now and what you pay in two- or three-years’ time is sometimes a lot more expensive. There’s a consultation paper coming out this summer, but the Government are about a year behind where they should be and that is because of Brexit. They’ve had a couple of things on their mind more than energy.
The intention now is that we move towards encouraging green gas, but the problem we’ve got with gas is having physical pressure within a pipe. Equipment that takes in gas, is built to take gas at a certain pressure of the network, so if you start messing about with the pressure and the gas, which is what you really need to do to get a lot of renewable in, it means that businesses built this equipment to take gas at a certain level and it now won’t be at that level. So, you either try to do something massively expensive to the network or business has to do something.
Gas vs Electricity
KC: The big difference between gas and electricity is you can store gas and you can play with the pressure to a certain extent with something called linepack. There was one really cold day when we nearly did run out of gas. The two things that meant that we didn’t was Ineos, the biggest gas user in the country, agreed to switch off. They were handsomely paid for it – they didn’t do it because they were nice people. Also, the National Grid was able to play with the pressure within the system just enough to allow everyone to continue. So, there are some physical characteristics that are different about gas, that actually in some respects make it easier. But an enormous amount has already been spent on that which hasn’t been spent on the gas infrastructure.