Sustainable Energy Options for Business

Philip Wolfe

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351275545
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios en general

The major environmental impact of most businesses derives from energy usage. The upside of this is that using energy more responsibly improves profitability. A business's cheapest unit of energy is also the one which is least damaging to the planet: the unit you don't use.There are many ways to make your organization's energy usage more sustainable. In Sustainable Energy Options for Business, Philip Wolfe outlines the best available options for (1) reducing energy use and (2) improving the sustainability of energy supply. After an introduction to regulatory drivers and management issues, Wolfe looks at energy opportunities in five key areas: 1. Saving on energy usage; 2. Finding more sustainable sources of energy; 3. Generating renewable electricity; 4. Producing renewable heat; 5. Indirect energy sustainability options.Also included: An "energy checklist" to help identify your best options and important quick wins, plus a handy reference list, signposted from annotations in the text.

Chapter 1
Energy Trends and Policy Drivers

THESE DAYS WE TAKE ENERGY FOR GRANTED, as one of the most fundamental commodities required for modern life. It was humans’ ability to harness the embedded energy in coal which fuelled the industrial revolution. The pace of industrial progress accelerated again in the early 20th century when another fossil fuel reserve – oil – made the internal combustion engine possible. The trend has continued in recent decades, with a third fossil energy resource – gas – now used for much of our heating and electricity generation.

Energy and growth

For most of this time, there has been a fairly direct link between economic growth and primary energy use. Global energy consumption has closely tracked GDP since the industrial revolution.

This relationship was of little concern to anyone for much of the 20th century. The first indication that it might not be a sustainable situation came in the 1970s when the Organisation of Petroleum Exporting Countries (OPEC), which controlled much of the world’s supplies of oil and gas, unilaterally restricted output. While not catastrophic in terms of supply, this had an immediate impact on price. It also created awareness of the first constraint on energy usage – security of supply: the geographic and political mismatch between the major sources and users of energy.

The oil shortage was a temporary glitch; supplies soon reverted to normal, with consumption again rising exponentially, in turn stimulating further exploration. An enlightened few realised that these trends could not continue indefinitely, that resources must be finite and the time will come when humankind is consuming fossil fuels faster than new resources are being discovered. This is expected to happen first for petroleum (for which it might already have occurred) and hence the expression ‘peak oil’ was coined.

The third factor to inhibit the relentless growth in fossil fuel usage is of course climate change. Awareness of the threat of atmospheric carbon dioxide to the planet’s ecosystem substantiates the un-sustainability of historical trends.

As governments have been made more forcibly aware of the triple threat of energy security, resource depletion and climatic instability, they have started to formulate policies to make energy usage more sustainable, without compromising economic growth.

The main thrusts of policy objectives have therefore been:

• to progressively decarbonise the energy resources we use; and
• to weaken the link between economic development and energy use.

There is now patchy evidence that primary energy consumption does not need to rise inexorably with economic growth. Some countries – most notably China – have started to reduce their primary energy consumption per unit of GDP.

International and national policy

A minority of states, including Germany, Japan and (perhaps surprisingly in light of their lack of involvement in the Kyoto Protocol) certain US states, have been relatively proactive in developing policies for energy efficiency and renewables. Others have tended to be more passive with much of their policy driven by international initiatives. The most notable of these have been the Kyoto Protocol of the UNFCCC^C13 and, because Europe has been a progressive force within this movement, the various environmental and energy directives from the European Union.

Here in the UK it has been the EU directives, in particular, which have driven policy in this area. In the context of this book the two most significant initiatives are the Renewable Energy Directive^B12 and the Energy Efficiency Directive.^B9 There are additionally several other European policies, affecting buildings and transport for example, which also drive towards a more sustainable energy mix. In response to these European measures, the UK has introduced a number of policies to promote energy efficiency and renewable energy.

There are also a growing number of indirect measures, in particular in relation to building standards. I do not intend to describe these in any detail because they will not affect you unless your business is in the construction sector or you are involved in building your own premises.

The UK government’s Department of Energy and Climate Change (DECC) is developing specific strategies for energy efficiency^A2 and renewable energy,^A3 in the latter case supported by a so-called roadmap.^A4 DECC has rebranded the responsible sections as the Energy Efficiency Deployment Office^C7a (EEDO) and the Office for Renewable Energy Deployment^C7b (ORED), respectively. The main legislative measures which support government strategies are:

The primary energy efficiency incentive will be The Green Deal,^B12 being introduced in 2013. This will also absorb much of the Energy Company Obligation^B6 (ECO), which replaced the Carbon Emissions Reduction Target^B2 (CERT) – previously the Energy Efficiency Commitment (EEC).

Renewable energy has four schemes: two for electricity, the Renewables Obligation^B15 (RO) and the Feed-in Tariffs^B11 (FITs); and one each for heat, the Renewable Heat Incentive^B14 (RHI), and transport fuels, the Renewable Transport Fuels Obligation^B16 (RTFO).

Beyond these energy measures (more details below), there are broader schemes aimed at reducing carbon emissions in general, primarily:

EU Emissions Trading Scheme⁸⁷ (EUETS) covers all major EU carbon emitters, including about 1100 UK organisations which together account for 50% of our emissions. Participants receive or buy an annual cap or 'allocation'; if their emissions exceed this level, they have to buy further allocation, but if they emit less, they can sell the surplus credits.

Climate Change Agreements^B3 (CCAs) are voluntary arrangements whereby large emitters can agree emissions reduction plans in exchange for concessions again the Climate Change Levy.

The CRC Energy Efficiency Scheme^B5 was introduced as an obligation on larger businesses to progressively decarbonise. For the purpose of this measure, larger businesses are those which do not fall within the EUETS or CCAs but have an annual energy consumption exceeding 6000 MWh. These businesses account for about 10% of UK emissions.

Businesses which qualify for these schemes have doubtless devised a more systematic approach to their carbon reduction strategy, but may still benefit from the proposals in this book. Businesses which currently fall below the CRC threshold should anyway be developing policies for carbon reduction. The government has indicated that it intends to progressively broaden the criteria for involvement in the CRC, so your day may be coming sooner than you think.

The following chapters pick out aspects of these measures which are of particular relevance to businesses wishing to improve their energy sustainability. Those who want to study the full national strategies and regulations in further detail can follow the links shown in the reference section at the end of this book. Try not to be put off by the number of different initiatives and the frequency with which they change.

Decarbonising national energy supplies

As part of the transition towards a more sustainable domestic energy supply, many countries have set objectives to reduce the carbon intensity of their primary energy resources. The UK’s Climate Change Act^B3 sets a target of an 80% reduction by 2050.

The three largest applications of energy are transport, heating and electricity. Of the three, electricity is the one best suited to low carbon forms of generation, and so this tends to be the primary focus for carbon reduction policies.

In the UK, for example, there is a binding obligation under the European Renewable Energy Directive^B12 to increase our renewable energy contribution to 15% (from less than 5% today). The government blueprint for reaching this target by 2020^A3 envisages that renewables will supply over 30% of our electricity, but less than 10% of the country’s transport fuels and heating. The government further intends that UK electricity will be ‘almost completely decarbonised’ by 2050D2. This is scheduled to be achieved mainly through renewables, but also from nuclear energy (which is classed as being carbon free) and from carbon capture and storage (CCS) in gas- and coal-fired power stations.

Policies to promote the blending of biofuels into petrol and diesel supplies and to enable biogas to be injected into the gas grid will also progressively decarbonise those energy vectors too.

So, one strategy for reducing your business carbon footprint is just to carry on regardless and rely on a gradual decarbonisation of national energy supplies to reduce your own carbon footprint. But hopefully you will want to be more pro-active than that.