Clean energy is losing out to the 'Blue Planet' effect

Written by: Maxine Perella | Published:
Maxine Perella wants to look past the daily headlines on deeper developments materialising

If you can avoid being distracted by the daily headlines on plastic straws, coffee cups and deposit schemes, there are some deeper developments materialising that could have quite significant implications for this industry as it looks to modernise and operate effectively within a new, low-carbon world.

A green finance report released last month by the House of Commons Environment Audit Committee notes that, worryingly, investment in green technologies appears to have stalled over the past two years. It points to recent figures, which show that clean energy investment has fallen dramatically since 2015 – in cash terms it fell by 10% in 2016 and by a further 56% in 2017.

“Annual clean energy investment in the UK is now the lowest it has been since 2008 and the rate at which we are installing new renewable capacity is slowing,” the report states. This slump in investment not only threatens the UK’s chances of meeting its future carbon budgets, but actually weakens the premise of the government’s Clean Growth Strategy (CGS) – a piece of policy designed very much to support the waste industry and help it transition into a smarter, more innovative service provider.

The report notes, for instance, that even if all the CGS’s aims are delivered in full – remember, this includes central funding (a healthy slice from an allocated funding pot of £2.65bn) for breakthrough waste and resource efficiency solutions that can help decarbonise the UK economy – it still won’t be enough to address this carbon budget shortfall.

The report goes on to suggest that in order to meet the UK’s long-term carbon reduction targets, “low-carbon energy projects need to be in development now, given the long lead-in times involved”. So those breakthrough solutions the CGS hopes to kickstart, such as the development of advanced biofuels made from municipal solid waste, should have really been in the planning pipeline long ago.

What does that do for investor confidence? Well, it erodes it further, unfortunately. And that’s the key point the report is making. Aspirational policy is something this Government is proving to be quite good at, but aspirations alone don’t hold much weight when you’re stood face to face with a banker or equity fund manager.

What the CGS badly needs is a delivery plan, one that’s detailed and clear. Hopefully this will come in various forms – Defra’s forthcoming Resources and Waste Strategy could be one element of this.

Key questions

Some of the key questions that need answered are: How will the Government stimulate development finance for the decarbonisation of local heat, transport and heavy industry?

Will it negotiate with the European Investment Bank to maintain a good relationship, post-Brexit? (This could allow riskier early stage projects to continue to access development bank finance). How can partnerships be developed between industry and local authorities to help finance more local, small-scale, low-carbon waste-to-energy projects?

Given that the Government believes low-carbon transport fuels made from waste materials could be worth £600m a year to the British economy by 2030, then surely there’s a clear business case there for ministers to provide answers to those questions.

My worry is that politicians are still caught in the bright headlights of the ‘Blue Planet effect’; they can’t see beyond the latest single-use plastic culprit that the media has called to stand trial. Personally, I’d rather talk litter than plastics. Litter is the real problem here. But that’s another column for another day.

Perhaps to finish then, a quick word on the recent local election results. I like local elections as they often give a future signal or two as to how politics and policy might change in the coming years.

On the face of it, the results mean nothing new for the sector in the short term, but with the Conservatives still very much trundling on, it would be a mistake to write off Labour’s chances of winning the next general election. And if they did, some big changes could be on the horizon.

Jeremy Corbyn, socialist to the core, is a fan of renationalisation – this means taking private services back into public ownership, which could include bin collections, where outsourced, which I believe is around 50% of collections nationally.

This could have some interesting repercussions for private waste management companies. It’s just something to be aware of and may not amount to anything given the transient nature of politics these days. Who knows come the next general election where Jeremy Corbyn or Theresa May might be, or even Michael Gove for that matter.

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