More focus on climate change

The SCMP newspaper (unlinkable article) reports a survey that found

…..two-thirds of Hong Kong’s respondents thought the government should place a higher priority on climate change, while 30 per cent thought the current priority was appropriate

Now I haven’t seen sight of this survey, but it is an interesting idea. People in general tend to think that climate change is large problem, so overwhelming that it is only a governmental issue rather than business or personal issue. Yes, I do agree that government has a role to play but I feel it is far more important that you stack the cards in their favour first. Governments are inherently slow to act, business can act  today, gain a leadership position before regulation is imposed.

I think Wal-Mart a US company has the right idea, its ahead of the curve. Voluntarily, without any fancy regulation, its products will have a carbon footprint, the cost has been estimated in the region of US$250million, and other retailers will be left to follow the leader.

In certain instances government needs to balance the mismatched market, the much vaunted Polluter Pays principal is fine if it is actually implemented. Presently it is not, externalities, for example the social cost for health, and well fare are not costed in the market, and only regulation can readdress that issue. As this survey indicates like it or not the people want more government action.

– John Herbert, Consultant, Kelcroft E&M Limited
helping lower the cost and impact of doing business in Asia

A Big Ask

John Herbert Keynote speech at Energy Business forum June 2009

I know many have high hopes for the forthcoming treaty negotiations in Copenhagen, I don’t. In my view only an overwhelming ground swell of public opinion today has a chance to sway our local officials from the typical do nothing course.

Need evidence? Let’s review the Hong Kong Council for Sustainable Development media output over the last two weeks. The Chairman, Mr Bernard Chan, recently commented upon the soon to be released green building consultation. Being the Government de facto sustainable development proponent one should expect a little waffle.  But No, it was an avalanche of warnings.  The chairman spent his air-time warning the general public about the dire consequences of asking for green buildings, including a thoughtful statement about “extra cost” of energy efficiency, without reference to the missing part of the puzzle – externalities (social cost).

To add insult to injury, the general public will not get sight of the consultation, until those renowned building energy efficiency experts Hong Kong’s “architects” and “developers” have given there views first no doubt to shape what will be finally issued to the public.  Yes, your read it correctly, we can’t have a consultation with prior approval.

It seems Europe is suffering too, here is a great little video to encourage action. enjoy.

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John Herbert
Consultant
Kelcroft E&M Limited

Carbon Reporting with only one catch.

Really the Hong Kong the government is so far behind the curve in environmental matters I am surprised that it is not a serious concern for business, or are they blind to the risk? Instead of leading Asia, we lag behind the so called developing countries, and it is our economy that will suffer. I think nobody would want to try and predict the outcome from the Copenhagen summit but as a Chinese city we can expect some impact.

I have previously reported that the writing is on the wall for voluntarily carbon reporting.  And that prediction is one step closer to reality since the EPA (USA) has grasped the opportunity of the new 2009 presidency and signalling intentions for compulsory carbon reporting for US factories.

Global Carbon
Since Carbon is a global phenomena it does not require a vivid imagine to see where all this could lead.  Let’s assume for a moment that China continues to claim “developing country” status and does not require compulsory carbon reporting for manufacturing facilities. Importing countries, like the USA could demand it. You might think I am stretching the US EPA’s jurisdiction, perhaps, perhaps not. Consider the considerable power wielded by US trade negotiators, and the political pressures recently demonstrated by the “Buy American Only” stimulus package! It seems clear to me that any factories or business exporting to foreign markets will need to report their local carbon emissions.

Indeed it could be argued that the China is already heading in this direction (China wants importers to cover some emission costs) has already laid the groundwork, with Chinese official’s arguing that the cost of Chinese emissions for products exported to US markets are the responsibility of US market. In the future US importers may be required to bare an extra cost, the carbon cost, for emissions within China, but wait China is not the only exporter to the US.  Surely India, Thailand, Vietnam, etc. will have equally valid reasons to claim equal rights?

While US business might be quietly smarting over the idea, extra costs that are never welcomed, another surprise could be around the corner because the distant carbon emitted, and hence its cost, will surely give them further reason for pause.

China Energy Efficiency
If your report card was based on China’s energy efficiency, its one that you’d probably like to hide. The power generation sector is predominately coal based that is well known, lacks modern boilers and the latest controls technology. The risk from the resultant emissions could cause a nasty surprise. How this will play out is unclear, it is really a political trade issue more than a technical Carbon issue, undoubtedly there is an unseen business risk.

John Herbert
Consultant
Kelcroft E&M Limited

Current CO2 level in the Earth’s atmosphere

Energy Efficiency is by far the fastest, most benign to the environment, and cost effective weapon we have to tackle climate change – and time is running out for voluntary action.

Governments across the planet are finally realising that it is very much harder to the promised reach targets, although most were only modest goals and the next climate summit will be interesting.

Current chart and data for atmospheric CO2

It is reported here that within the US stimulus package approx. 3% has been allocated for energy efficiency projects-that is significant.  However, no single country, government, state, business, or individual can solve this problem alone, it is the big daddy of all global issues, requiring complete international cooperation.

We have already exceeded the danger threshold @ 350ppm, and CO2 is still increasing faster than ever before. At a local level, many business are preoccupied with the financial crisis, will likely overlook the quietly accumulating business risk (see the graph) until there weighty carbon tax demand note hits their mailbox.  By then it will be too late. Those who were are not already prepared will likely suffer the wrath of stakeholders and investors for ignoring the writing on the wall.

Still I remain optimistic, since there are many businesses are still unaware of the zero cost, low impact opportunities to embrace Energy Efficiency Improvements (EEI) using a performance contract, can be quickly implemented without upfront capital cost.

US – China Cooperation on Energy and Climate Change

A Source For EE Quotes

I know it is hard to find good quote for your EE presentations, so the report report by the The Asia Society  A Roadmap for U.S.-China Cooperation on Energy and Climate Change is welcome.

However, it is worth noting that the fixation with CCS (Carbon Capture and Sequestration) as a solution remains as strong as ever. Now bear in mind that over the years it was another promised solution, yet as the report recognises, nobody has as managed to build a working facility. The reports first recommends further US-China cooperation to develop CCS projects.

Yes, Energy Efficiency improvement is mentioned as part of the solution, so we must be grateful. From page 32…….

2. Improving Energy Efficiency and Conservation
To reduce greenhouse gas emissions, enhance national energy security, and save money, the United States and China both need to prioritize and expand energy efficiency and conservation efforts.

In the near term, the most significant step that the United States and China can take to reduce their emissions and enhance their energy security is to reduce energy demand through greater efficiency and conservation. In many cases, these efforts also promise significant economic benefits, with only modest upfront investments returning substantial long-term savings through lower energy costs.

Indeed, energy efficiency measures are often characterized as “negative cost” opportunities, meaning that they result in positive economic returns over the lifetime of the investment. A recent McKinsey study estimates that 40 percent of emissions abatement opportunities in the United States could be achieved at “negative” cost by, for instance, improving building insulation and lighting, and by using more fuel-efficient vehicles and appliances. However, these potential gains often remain unrealized because of market inefficiencies, lack of information, government neglect, and shortages of upfront capital. More targeted government policies are needed in both countries to overcome these market barriers.