As business optimism in the general economy falls, GreenWise asks business leaders, NGOs and academics what are the opportunities and challenges for green business in 2012?
On business sustainability
Jon Bentley, Smarter Energy lead, IBM Global Business Services
2012 will continue to offer opportunity for green businesses, but it is clear that success will rely on their ability to translate sustainable outcomes into cost savings. A year ago, I was optimistic for 2011 because major corporations were beginning to bring sustainability into the mainstream business agenda. I believe this continues to be the trend, but as sustainability becomes business-as-usual, the imperative for it to align with and reinforce other priorities becomes ever stronger. There is no doubt that businesses are expecting to face difficult times next year, so the spotlight will be on costs.
Capital will remain difficult to secure and there will be intense competition between alternative projects. Minimising up-front investment
and securing a reliable flow of benefits that can be monetised will be vital. So, projects that foster the efficient use of resources, reduce waste and avoid taxes, penalties and mitigation costs from whatwaste
does remain will be the most attractive. Unfortunately, cleaner sources of energy that are also more expensive are likely to suffer with less generous Government support.
Despite the gloomy outlook, the essential energy challenges remain and billions will be spent in the coming decade as we address them. Our economy remains energy dependent, yet the UK is committed to its carbon targets. We have no choice but to replace much of our existing generation capacity as it reaches the end of its life and a smarter end to end energy system is needed to secure supply and deal with the variability of renewable
generation and electric vehicle charging. The government is pressing ahead with the nationwide smart meter programme and is bringing in the Green Deal to foster energy efficiency
With the amount of change and investment in the energy sector, there are opportunities for businesses large and small. The winners will be those that can combine innovation
and collaboration with practical, efficient execution. Results will count more than vision in the years to come.
Magued Eldaief, managing director, UK, GE Energy
The opportunity, which is also the challenge, is to focus on cost for the various green technologies that will contribute to meeting the UK's decarbonisation goals. In view of the pressure on subsidies, green businesses will have to work on coming up with more cost effective alternatives that will accelerate technology innovation as long as there is a continued commitment and demand by the UK Government.
Tom Delay, chief executive, Carbon Trust
The central challenge facing green business in 2012 is to show the synergy between sustainability and cost reduction, while busting the myth that there’s any contradiction between the two. This means winning the argument that times of austerity demand more efficient organisations. 2012 will therefore be a particularly strong year for demonstrating the financial value of and the direct, measurable profitability from green innovation. Products and services delivering enhanced energy efficiency and reduced resource use will naturally perform well in an economically pressurised times.
Dax Lovegrove, head of business and industry, WWF
It is increasingly evident that both economic and ecological austerity are with us for the foreseeable future and so to be fit for purpose, companies will need to re-think their way of working. Businesses that adapt and increase efforts around innovation will be more resilient.
There is a glimpse into future business resilience atwww.wwf.org.uk/gamechangers
. Small nimble enterprises are racing ahead with leaner business models and perhaps in 2012, we will start to see such approaches migrate across to big business in order to secure increased future-proofing.
For example, there is a raft of emerging peer-to-peer social networking sites that enable and even glamorise collaborative consumption – the re-use of household goods and clothes. This approach could start to spread into mainstream retailing.
There are also many opportunities for businesses to support the reversal ofbiodiversity
loss. Leisure and tourism
companies have options to invest in biorock projects, which are currently aiming to restore coral reefs in Bali and Indonesian waters or food
businesses could encourage the scale up of agroforesty programmes where native trees and crops are planted in the same space.
Open loop initiatives are also on the rise where numerous web platforms act as dating agencies to help match waste with resource requirements. Greater collaboration within and across business sectors will achieve a more circular economy.
We are just scratching the surface of new innovative approaches to doing business in ways that protect the world's natural assets and this will start to escalate in 2012.
Liz Goodwin, chief executive, WRAP
When money is tight, business naturally seeks ways of economising. Those organisations, which take the opportunity to improve business performance by using less energy, wasting fewer raw materials and looking for ways of re-using resource, are more likely to weather the economic challenges. Actions that can have a real impact range from simply turning down the heating right through to extending the service life of equipment.
On green policy
David Powell, economics campaigner, Friends of the Earth
Janez Potocnik, European Commissioner for the Environment, describes the move towards resource and carbon efficient business as a "global megatrend", particularly as the economic squeeze continues. Doing more with less is a huge opportunity, if not an imperative, for business of all shades – whether they consider themselves 'green’ or not.
And, despite the stumbling steps taken in Durban earlier this month, there’s no doubt that the opportunities for new markets is going to continue to grow: the estimated £4 trillion global market for green goods and services is only going to continue to grow.
If there’s a challenge for UK businesses wanting to nab a piece of the pie, it’s the very stiffness of global competition: firms that may do best will be those that can compete on price or can offer a vital service that can’t really be imported – such as insulating people’s homes.
How successful the Government’s policies will be, like its new Green Deal to encourage homes and businesses to improve the energy efficiency of their buildings
, will to a large extent define how big the opportunities are for domestic firms. One thing is clear: more than ever, and given the tribulations of this year, business needs to know that the Government is committed to building a green economy and not pulling the rug from under our newest, most exciting industries.
Jane Burston, founder, Carbon Retirement
What I've realised, having been at the climate summit in Durban [last month], is that the UK Government is still doing a lot to lead the world on the issue of climate change. One of the challenges for UK green business is going to be to convince investors that that commitment is still there. George Osborne's rhetoric combined with policy
moves like the highly visible U-turn on Feed-in Tariff (FiT) has created an uncertain environment in which it is going to be very difficult to get new green businesses off the ground.
Gideon Middleton, senior lecturer, Norwich Business School
By far the biggest challenge for most businesses is the lack of certainty around the overall national and international direction of green policy and the potential financial implications and the increasing quagmire of UK legislation – especially around energy and carbon. This creates problems for all business as energy and carbon are ubiquitous costs and the overall lack of a clear direction means that business cannot effectively plan because there is a large uncertainty around strategic energy and carbon costs as well as the potential size of any Feed-in Tariffs.
Andrew Lee, head of international sales, Sharp Solar
Opportunities for business in the solar industry are now severely limited since the Feed-in Tariff has been structured in such a way that it is only suited to wealthy homeowners and very small scale projects. The last 18 months have shown that solar technology and its incentive scheme is effective and there is a demand for it, but these changes mean investors will no longer drive the market, which is chopping this promising and growing industry off at the knees. Our research indicates that domestic solar is the preferred technology homeowners would like to see more of in their community, with 40 per cent of those polled choosing it over other methods, which makes the Government’s decision to stifle this industry even more baffling.
Juliet Davenport, chief executive, Good Energy
Because we need so much investment in our energy infrastructure the fact remains that the renewables sector is one of the few areas where growth is certain for the foreseeable future. Offshore wind continues to get the lion’s share of attention, but there will continue to be opportunities in the onshore sector too. Despite the ongoing issues with solar and the sub-five megawatt Feed-in Tariff, that technology will have an important role to play going forward, particularly as the technology costs fall. The development of marine renewables will continue to be exciting and there is an opportunity for the UK to really lead the world in developing the full potential of this technology.
The challenge is whether the Government delivers the certainty businesses need to invest in those technologies. The way it has handled the FIT for solar has harmed its efforts to provide that certainty, but it’s worth remembering that not all the blame for that lies at DECC’s door. It’s also worth bearing in mind that it is just one technology up to a certain scale. All the signs are that the review of the Renewables Obligation has, broadly speaking, been handled well, though that scheme hasn’t faced the same kind of budgetary pressures as the FiT.
What is key that the processes behind the reformed FiT and the new FiT Contract for Difference are transparent and easy to understand. That will provide green businesses with the certainty they need to invest.
Andrew Warren, director, ACE
The Government is at last committed to examining thoroughly whether running more purposeful energy saving programmes can reduce the need for new power stations. However the "jury is out" as to whether there are as yet sufficient policies in place to minimise electricity demand in particular.
At present, the proposed electricity market reforms focus entirely upon creating a framework to ensure sufficient electricity generation is in place to deliver the Government’s climate and energy security objectives. Hence the claim that £200 billion will need to be spent on new power stations this decade, particularly under DECC scenarios regarding the electrification of heat.
The senior civil servant, Jonathan Brearley [...], speaking at a British Institute of Energy Economics conference,credited unidentified "external commentators" with drawing policy attention to the demand side alternative. He said that, over the next year, there would be "strenuous consideration" of policy options designed to reduce overall demand.
Brearley’s announcement precedes the official formation of a new division within DECC, to be called the Energy Efficiency Deployment Office. The new Office is recruiting 50 new staff, drawn from across the civil service.
It is now over 30 years since the House of Commons Select Committee on Energy first raised the question as to why public policy fails to compare investment options. Since then, innumerable Parliamentary energy and environment reports have reiterated this argument, without any substantive response from Government. Until now.
On renewablesMaria McCaffery, chief executive, RenewableUK
Job creation in the wind industry is continuing even though other sectors are contracting during the economic downturn. In December, Siemens submitted a planning application to build a wind turbine factory in Hull, which will employ 700 people, and many more in the supply chain. The wind turbine tower manufacturer Mabey Bridge in Chepstow has just announced plans to double its workforce to nearly 200, and to operate 24 hours a day to meet demand. Announcements like these serve to boost business confidence and optimism as we approach 2012.
RenewableUK has published a report demonstrating the employment potential of the sector between now and 2021, outlining various market development scenarios. Under the medium growth scenario, nearly 90,000 people will be working in the wind and marine energy sectors (including the supply chain) by 2021. Research such as this strengthens the mood of optimism in this dynamic sector.
In October, RenewableUK announced the creation of a new organisation called the Renewables Training Network (RTN), which aims to tackle the critical skills
shortages within the sector. I'm confident that the RTN will start to make a real impact in 2012, helping to provide courses at every level for workers wanting to make the transition into industries we represent.
We also have to emphasise the message that we are committed to driving down costs. We are proud that ReneweableUK's chairman, Andrew Jamieson, has been appointed Head of the Offshore Wind Cost Reduction Taskforce. Their aim is to bring the levelised cost of electricity generated offshore down to £100 per MWh. We are determined to show that we are committed to offering value for money to the consumer.
On green tourism
Andrea Nicholas, managing director, Green Tourism Business Scheme
The priority for the green tourism sector for the coming year is undoubtedly that of demonstrating the business value of sustainability – its potential to drive savings and to bring competitive marketing
advantage to help attract customers. Increasing the accessibility of information about green savings is part of building on existing momentum. From the GTBS for example, there will be new online information pages, which detail exactly how and where energy (and therefore cost) savings can be achieved.
Despite economic pressures, the business travel and events marketplace is looking more than ever to mind the 'green imperative’. Reflecting this, the GTBS has been fortunate to form partnerships with two influential booking agencies, BSI and Inntel, over the last few months. Both are working on featuring GTBS gradings in their venue listings to help guide bookers to the greenest options.
On the leisure tourism side, it is vital that consumers’ interest in green is maintained during an uncertain economic climate, and a revamp of our own consumer-facing site is underway.
Another opportunity for green tourism stems from the disappearance of many tourist boards and regional development agencies, meaning that business and marketing support at destination level is almost non-existent in parts of the UK.
The GTBS is planning to help fill the gap by introducing an online project whereby any destination can have a web page, which can be populated with locally-based business support information on how to go green.
Finally, there is an opportunity to be found in the development of the 'green’ context. Social and community dimensions to sustainability are increasingly relevant (thinking about the 'Big Society’) and the updated GTBS criteria, which are being worked on this year, will reflect the benefits of initiatives, which are not just climate-focused but take into account also, in the broadest sense, sustainability.
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