Climate Change

Offshore turbines

Green Opportunity

The world is changing.  Over the next half century our use of fossil fuels will greatly diminish.  The UK and most of the rest of the world will transition to using green energy sources.  That means more electric vehicles and a shift to renewable energy.

Two undeniable realities are converging to force the pace of that change. 

The first is the global climate emergency.  To keep global warming in check we must reduce carbon emissions and, to do that, we must move away from using fossil fuels.  The world has no real choice.

The second challenge is the simple fact that, sooner or later, the world will start running out of fossil fuels to burn.  Up to now, this date still appears far off.  New technologies and the discovery of new reserves means we are unlikely to run out any time soon.  Nevertheless, the fact remains that fossil fuels are a finite resource.  At some point or other, we will have to shift to alternatives.

Often, we see the shift to greener energy as a necessary cost, the price we must pay for preserving our environment and securing our future survival.  Indeed, there is no denying that a shift to a greener economy does require investment over the short to medium term.  Electric vehicles are still more expensive to buy new than conventional ones.  Installing solar panels or geothermal heating requires an (often hefty) initial investment.

However, the shift to greener energy is also an opportunity.  The whole world is changing – not only the UK, but every country is challenged with making the same transition.  Such a radical shift requires significant investment, new technology, new infrastructure and all the ancillary products and services that accompany that.  It is therefore also an opportunity.  Those who lead the way and grasp that opportunity will be well placed to capitalise on it in the future.

Some of the world’s largest and most profitable companies today are oil and gas companies.  Their wealth and success stems from the fact that they are central to supplying the world’s economies with energy today.  It therefore follows that, in the long term, those businesses that lead the way in the green economy of the future, have similar success to look forward to.

The process of transitioning to a greener economy is already well underway.

Today the UK generates 48.1% of its electricity from renewables.  There is still a long way to go but when you consider that figure was only 21.3% a decade ago, things are clearly changing fast.

In the past year (up to the autumn of 2023), 55% of all new vehicles registered in the UK were either electric or hybrid.  16.4% were pure electric vehicles, up from a virtually negligible proportion (1.7%) only four years ago.

So, there is no doubt that the UK is making progress.  However, we are not at the very forefront of change.  If we consider the ten largest western and central European countries by population, the UK only ranks 7th highest in terms of the proportion of our electricity requirement generated by renewables.  Sweden is way ahead of us (77.5% renewables).  Romania, Germany, Netherlands, and Spain are also significantly ahead (in all cases generating over 58% of their energy requirements from renewables).

Pie chart of the proportion of tk electricity generated by renewables.

Here in the UK, we don’t get much sun, so we can’t generate as much electricity from solar power as many other countries.  However, the UK is quite windy.  As a result, over half of our renewable energy is generated by wind turbines. 

Our island coastline makes offshore wind a particularly appealing option.  Indeed, the UK generates more electricity from offshore wind power than any other country except China.  In terms of offshore wind power, the UK is well placed to lead the way.

Despite all that has been achieved so far, a CBI report from January 2023 warned that the UK is in danger of falling behind.  Investment by the UK government in tackling climate change is now beginning to run behind some of our key international competitors.

The proportion of government spending committed to climate change by country.

As a result, over the past two years or so, the UK’s share of emerging green markets has remained static or even gone backwards.  Our share of the offshore wind cabling market is unmoved at 12%.  12% sounds a lot, until you consider that the UK accounted for 27% of global capacity for offshore wind in 2022.

By a similar token, our share of EV assembly has fallen from 6% to 5%;  our share of EV batteries from 2% to 1% and of hydrogen electrolysers from 6% to 2%.

A recently published survey by EY warned that the attractiveness of the UK for clean energy investors has fallen from fourth to seventh in the international rankings.

The past year has also witnessed Britishvolt, a UK flagship lithium-ion battery manufacturing venture, go into administration.  The Australian owned Recharge Industries have been attempting to revive the project ever since.  However, at the time of writing, its future still looks most uncertain.

The UK has made good progress in transitioning to a green economy thus far.  We are still well placed to capitalise on the opportunities this transition will bring.  However, there is no denying that things have stalled somewhat of late. Investment has levelled off and is being surpassed by international competitors.   The UK has ambitious targets but there is little by way of any detailed long-term industrial strategy in evidence.  The government’s recent back-peddling demonstrates a relatively lukewarm commitment to drive things forward.

All this recent reticence to make detailed plans or commit to significant further investment no doubt helps balance the books in the short term.  However, short-term cost savings could lead to the UK paying a bigger price in the longer term (especially if short term becomes medium term).

83% of businesses at a Chamber of Commerce event at the Eden Project on 27th September thought that recent government back-peddling on net zero policies were unhelpful for business.  Indeed, only 2% thought they were helpful.

But let’s be positive.  It is by no means too late to address these setbacks.  The UK is still well placed to take advantage of the emerging green economy.   Even as I am writing this piece, the UK government announced it will be increasing the amount paid for offshore power.  This should help to kickstart an erstwhile stalled offshore sector.  It’s a start at least.

However, whether the UK keeps pace with our international competitors or not, there is no doubt that the world is transitioning from the age of fossil fuels to the age of renewables.  Those who lead the charge and remain at the forefront of this green revolution will be well placed to reap significant rewards in the future.  The UK still has plenty of opportunity to capitalise on this.  Let’s hope it does.  It would be a great shame if these opportunities were squandered. 

Carbon Brief – What do Rishi Sunak’s U-turns mean for UK climate policy?

CBI Green Growth, January 2023

EDIE – UK fast becoming less attractive to international clean energy investors, EY warns

IRENA – Renewable energy capacity statistics 2023

Price paid for offshore power to rise by over 50% – BBC 16/11/23

SMMT – EV vehicle registrations

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Forest fire as an example of climate change effects

Climate Change in 2021

The Latest IPCC Report

On 9th August, the IPCC released its latest report on climate change.  Based on a detailed assessment of the available scientific evidence, it concluded that we are virtually certain to see global warming of around 1.5oC over the next 20 years.

In the longer-term global warming could rise even further, potentially exceeding a 2oC increase by 2050.  And, if it does exceed 2oC, that is bad news.  At that level the report warns, “heat extremes would more often reach critical tolerance thresholds for agriculture and health”.  Indeed, under one possible scenario we might be seeing a rise of as much as 4.4oC by the end of the century.

The report warns:

“…unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming to close to 1.5°C or even 2°C will be beyond reach.”

Who are the IPCC and why does this report matter?

The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related to climate change.  All 195 countries around the world support its work. Scientists from all around the world contribute to and assess its reports.

Every few years it publishes a detailed up-to-date assessment of where we stand.  The first report was published in 1992 and this latest report (August 2021) is the sixth.  As a result, its reports represent the most up-to-date, detailed and authoritative assessment of climate change available. 

The impact of global warming

Delving into the detail of the report reveals some rather frightening statistics that bring home just how significantly climate change is impacting our world:

  • In 2019, atmospheric CO2 concentrations were higher than at any time in at least the past 2 million years.
  • Global surface temperature has increased faster since 1970 than in any other 50-year period over at least the last 2000 years.
  • Global mean sea level has risen faster since 1900 than over any preceding century in at least the last 3000 years.

Over the past century, our world has experienced an average temperature rise of around 1oC.  We have only taken action to curb that increase relatively recently.

Where are we now?

Many nations have taken action to drive down CO2 emissions over the past two decades.  And, of course, the COVID pandemic temporarily forced a significant short-term reduction whilst much of the world was in lockdown.  So, we have made some progress.

Between 2000 and 2010, global CO2 emissions increased by just over 30%.  Between 2010 and 2019, emissions have continued to increase but, overall, at a much slower rate (10%).  Indeed, since around 2014/2015 the rate of increase has flattened significantly.

However, although CO2 emissions are no longer rising by much, they are not yet falling.  We are still a very long way from achieving anything approaching net zero.

What does the future hold?

Where we go from here will, of course, depend very much on what we do.  Do we take dramatic action now?  Do we aim for sharp and significant reductions in emissions and take the economic and financial pain that such action would surely demand? 

Or do we prioritise protecting the economy as far as possible and aim for much more gradual reductions? Depending on how fast (or how slowly) we act, the IPCC has calculated five possible scenarios.  Everything from a best-case scenario, based on what is likely to happen if we take drastic action fast.  Ranging through to a worst-case scenario, where CO2 levels continue to rise until late on in the century before finally seeing any reduction.

IPCC Climate Change Forecasts - 5 possible scenarios

Drastic Action

If we take drastic action now and achieve a global wide net zero for CO2 emissions by 2050 then the best-case scenario will apply.  However, so far, only 137 out of 195 countries have published a target of achieving net zero by 2050 (and even this is still under discussion in 72% of these countries).   Also, China (the world’s largest source of CO2 emissions) has set its net zero target for 2060, not 2050.

So, at present, the best-case scenario is unlikely.  Indeed, even under this scenario we are still almost certain to see a mean global temperature rise of 1.5oC relative to the average temperature of the world in the period 1850-1900.  It is now already too late to prevent that.

Given recent trends and current government targets around the world (and assuming those targets are all met), we are more likely to be looking at something similar to Scenario 2 or 3. 

In Scenario 2, we would need to see a more gradual but sustained reduction in emissions, achieving global net zero by around 2070 or 2075.  If we achieve that, we can just about avoid a temperature rise of 2oC.

Scenario 3 would assume a very limited/modest rise in CO2 emissions, gradually flattening as the century wore on, followed by a steady reduction in emissions from around 2060 onwards.  In this scenario we would not achieve net zero until the end of the century.  If this happened, we would see a rise of over 2oC by 2060, approaching a potentially catastrophic 3oC by the end of the century.

How will global warming affect us?

Depending on where you are in the world you are likely to experience different effects from global warming. 

Global warming has led to significant Artic ice melt but less significant melt in the Antarctic.  So it is not affecting us all equally.

However, places that have seen problems with extreme heatwaves leading to wildfires will see these events become increasingly common.  Places that have experienced more spells of torrential rain, leading to serious flash flooding will see such problems become a more frequent occurrence in future.

For northern Europe, global warming is likely to mean more heat waves in summer and fewer cold snaps in winter.  It will also mean more rain, especially in the winter, and more flash flooding following heavy downpours.  We can also expect to see more coastal flooding in those areas that have experienced such problems in the past twenty years or so.

For southern Europe and the Mediterranean region droughts, increased aridity and an increased incidence of wildfires in summer are very likely if global warming hits 2oC.  Agriculture in these areas is likely to become a lot tougher and the threat posed by wildfires will mean scenes like those in Greece in the summer of 2021 will become increasingly common.

Right now, we stand at a crossroads.  We can, if we so choose, act and limit the impact of global warming to something closer to that forecast in Scenario 1 or 2.  However, if we decide to act more slowly and opt to place short term economic and financial concerns before the longer-term environmental impacts, we may well be facing a serious crisis situation by the middle of the century.

In the light of this report, the decisions made at Cop26 this autumn will have a critical impact on our future. 

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

IPCC

Our world in data

Visualcapitalist

Deforestation – how concerned should we be?

We all know that our world has been suffering from the effects of deforestation.  If this continues unabated, we will see not only a significant loss of biodiversity but also a potentially significant negative impact on global warming.  Whilst we often read about this in the press, I thought it would be useful to pull together some numbers that help to illustrate the scale of the problem.

Tropical forests are important

Tropical rainforests only cover about 2% of the earth’s land mass, so on that basis you might imagine they can’t be that important.  However, this relatively small environment contains 50% of all the life on the planet’s land surface.  This includes an incredible variety of different animal and plant species.

Tropical forests also absorb a huge amount of carbon from the atmosphere and therefore play an important role in slowing global warming.  Tropical forests currently hold more carbon than humanity has emitted over the past 30 years by burning coal, oil, and natural gas. 

Indeed, overall, the world’s forests absorb one-third of the annual CO2 released from burning fossil fuels. 

But deforestation is accelerating

We have been aware that deforestation is threatening these habitats for a long time but, unfortunately, the problem is getting worse rather than better.

Between 2000 and 2015, deforestation saw an average of 3 million hectares of tree cover disappear every year.  But since 2016 that average has increase to around 4 million hectares a year.

Deforestation accelerated by a further 12% in the year 2019/2020, so there is no sign of any respite.

We are now in a situation where 30% of all the world’s forests have been cleared and a further 20% seriously degraded.

The Amazon Rainforest in Brazil is under the greatest threat

Deforestation as a problem is largely concentrated within a small number of countries that have large areas of tropical rainforest.

In 2020 around 40% of all global deforestation occurred in Brazil.  In fact, Brazil has been consistently destroying around 1.5 million hectares of rainforest every year since 2016. 

The next most serious problem can be found in the Democratic Republic of Congo, which has accounted for around 10-15% of deforestation in recent times.

Bolivia and Indonesia are the next most significant contributors, although, in the case of Indonesia the rate of deforestation has recently declined.

What causes deforestation?

We lose trees every year to a variety of causes, both natural and unnatural.

A major World Resources Institute study found that between 2001 and 2015 tree loss could be attributed to the following sources:

  • 26% was lost as part of managed forestry.  This is where trees in managed plantations are cut down for commercial timber.  Most of these trees will be replaced over time, as the plantation owners would always replant after harvesting a timber crop.
  • 23% are lost to wildfires.  These may become more widespread with global warming but they are a natural phenomenon.  Trees lost in this manner will also regenerate over time.
  • 24% are lost to shifting patterns of agriculture.  This is where forests are cleared and burnt, usually to free land for use in subsistence farming.  In some cases the forests may grow back, in others the loss is permanent.
  • Over 27% of forestry loss is the result of either urbanisation or commodity-driven deforestation.  This kind of loss is the most serious and is almost always permanent.

Whilst growing urbanisation creates a demand for land that can threaten forests, the growth of human urban centres actually accounts for very little deforestation (just 0.6%). 

So forests are not being cut down because people need space to live.

A far more serious problem is commodity driven deforestation, where forests are being cleared simply to allow us to grow commodity crops such as soy, palm oil or rear cattle.  This accounts for 27% of forest loss and is a major cause of deforestation in countries like Brazil.

In Brazil the dominant form of deforestation can be attributed to commodity driven deforestation to clear land for cattle ranching (accounting for 63% of all Amazon deforestation between 2001 and 2013).  Other significant culprits include commodity crops such as soy but cattle ranching for industrial meat production is by far and away the greatest threat.

What can be done?

The big question we face is what can be done about all this?  How can we save our forests?

In the case of the Brazilian situation we can all make a limited impact by reducing our intake of processed meat.  But ultimately real change can only be made if the Brazilian government can be persuaded to act.  Unfortunately, at this time, with other priorities such as covid taking up so much political time, we are unlikely to see much positive action.

Now the Brazilian government have argued that the management of their own resources is their own affair.  However, 10% of all the world’s wildlife species live in the Amazon and the Amazon rainforest accounts for 54% of all the world’s rainforests.  It can therefore justifiably be viewed as an important global resource and we should all encourage our own governments to work more closely with countries like Brazil and Bolivia to stem the tide of deforestation in this region. 

We might do this individually or by supporting organisations such as the World Wildlife Fund or Rainforest Alliance which are actively campaigning to help preserve these crucial environmental resources.  But, whatever we do, we should all remember that we don’t have the luxury of time to solve these problems and, every year, a further 4 million hectares of forest are likely to disappear.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

We offer market research services and opinion polling to clients actively campaigning on behalf of the environment and engaged in the green economy.  You can read more about this on our website.

Sources:

Global Forest Watch

IUCN

WRI

Mongabay

Sciencemag

WWF

Rainforest Alliance

The Road Ahead to Greener Motoring

In November 2020, the UK government announced that there will be a ban on the sale of vehicles with combustion engines by 2030.  The sale of some hybrid cars and vans will continue until 2035 after which they too will be banned.  The idea being that we are heading down the road to greener motoring.  Aside from the environmental benefit, it is hoped that the associated investment in electric vehicles and the infrastructure needed to support them will help stimulate our economy in a post-COVID-19 world.

It all sounds like a great target to aim for – but where are we today?  And more importantly, how can we reach our green destination?

Well, firstly it is important to acknowledge that like many other industries, the pandemic has hit the automotive sector hard.  2020 has been a tough year with SMMT figures showing a drop in new car registrations in the UK of more than 29% – the worst year since 1992.

Looking beyond the headline figure, 1.63 million cars have nevertheless been registered in 2020.  That is still a lot but, under more normal circumstances, new registrations have been regularly exceeding 2m in every year since 2013. The good news is that some 465,331 (29%) of these vehicles were electric or hybrid.  And, unlike the rest of the market, low emission vehicles of this sort have experienced strong growth (nearly 90% annual growth in a market that has declined by 29% overall can’t be bad).  

But if we are aiming to replace all cars on the road with electric or electric hybrids, we still have a long way to go.  According to UK government statistics there were just under 32 million cars on UK roads at the end of 2019.  Of these only about 2.5% were electric, hybrid or used some form of lower emission fuel such as gas.   Indeed, if you exclude all the hybrids, there were only just over 244,000 electric cars on the road at the end of 2019 (that’s less than 1%).  To replace 31.5 million vehicles with electric ones in a market where, even when things are going well, is only buying say 2 to 2.5 million new vehicles of any kind each year is clearly going to take a while.

So how do we get to 100%?  Well, one thing that clearly needs to happen is to develop the infrastructure needed to fully support electric vehicles.  As of 13th January 2021, charging points were available at 13,383 locations according to zap-map and 2,615 of these locations offered rapid chargers.  On the surface of it that’s great news.  Electric charging is now available at more locations than petrol / diesel filling stations.

However, these facilities are still in the process of being rolled out and many of our UK filling stations do not yet have them.  Many of the current charging points are in places like car parks in town centres or shopping centres or in the corner of a motorway services car park.  It is also the case that you may need to subscribe to several different providers if you travel around a lot and need to make use of charging points in different parts of the country.  The roll out of more charging points will help but ideally, we will still need an easy way for motorists to be able to access any and all charging points in a universally accepted manner. 

At present, the current set-up best suits people who are making mainly local journeys and who prefer to rely on charging at home.  If you charge at home and only make relatively short journeys you don’t need to worry too much about the need for re-charging mid-journey. 

This raises another issue that needs to be given some thought – how easy is it for motorists to re-charge at home?  If you keep your car in a garage next to your house or on your driveway then it is very convenient.  However, not everyone has off street parking and some people may sometimes find it difficult to find a parking space on their street near their home at all.  This creates a real barrier to adoption that will likely make it necessary to introduce some form of viable mass access to electric charging for anyone parking on a residential street.  This is a challenge but one for which there are possible solutions.  One possibility here might be to adapt ordinary street lighting to be able to offer EV charging facilities – as has been demonstrated in a trial run by Siemens in Westminster.

The other issue, related to charging, is range.  The range of electric vehicles is now much improved from what was once the case and we are now seeing vehicles coming to market with ranges in the order of 250-300+ miles on a single charge.  Coupled with access to rapid charging points it is now just possible to boost your range by 100 miles or so with a 30-minute re-charge en route at a rapid charging point.  So you can just about make a 400-mile trip with the current technology in practical terms.  It may not yet be ideally suited for long distance driving yet but every year sees new advances.

In a way the pandemic may have brought about changes in our society which will make electric cars fit in better with our lifestyle.  The long periods of enforced lockdown have caused many employers to re-think traditional practices of office working.  Home working and remote working will be far more the norm in the post pandemic world.  Not only that, but we have now got used to doing a lot of business via video calls rather than face to face.  As a result, people will be spending more time locally and less time commuting or travelling for business over long distances.  And more local motoring plays directly to the strength of electric vehicles.

A final significant barrier that needs to be overcome is the perception that electric vehicles are expensive.  In terms of the initial price tag, there can be no denying that the price differential can be significant – sometimes 40%-50% more expensive for an electric vehicle vs a petrol equivalent according to figures quoted by thisismoney.  That’s scary.  When paid for with financing, the monthly costs can be made to look more palatable but there is no getting away from the fact that the up-front purchase cost for a new electric car looks daunting in the eyes of many consumers.

However, if you investigate the issue of cost in greater detail, a more nuanced picture emerges.  One area where electric cars now offer a big price advantage is when you compare the re-charging costs to the cost of petrol.  Here the savings are potentially significant (thisismoney worked out a saving for £640 a year for a car owner doing a typical mileage of 10,000 a year when comparing a particular electric car with its petrol equivalent).  Electric vehicle owners may also expect to benefit financially in terms of tax, insurance, and maintenance costs.  Overall, this serves to balance the equation somewhat, such that the total cost of ownership over several years ends up being broadly comparable.  On this measure electric cars are not so expensive.

Comparing cars in terms of overall cost of ownership is, however, a task many ordinary consumers may struggle with.  It can be hard to see beyond the upfront price tag.  As a result, this may be an area the government will need to look at when crystalising their plans for getting petrol and diesel cars off our roads.  The car industry itself will also need to look at how it can find better ways to clearly articulate the value of these vehicles.  That means finding the right messaging to convince consumers that these vehicles are not actually as expensive as they first appear. 

But, right now, we are at the early stages of this journey.  A dramatic transition to greener motoring is on the cards over the coming decade.  Challenges exist for sure, but so do opportunities.  One thing is for certain – this is a market that will see some dramatic changes and significant growth over the next few years.

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