Transcript Corporate Social Responsibility

Business (and Job) Opportunities in the
Environmental Goods and Services
Sector
ICTU Round Table
2 4 th J u n e 2 0 0 9
Dr. Peter Brennan, Managing Director
www.epsconsult.ie
Opening Remarks
 Regulatory framework largely agreed; good news as investors respond to clear
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policy signals
Peak oil, sustainable development and global warming are the key drivers
Ireland is playing catch-up
Areas of Ireland’s competitive advantage known but awaiting full commercial
exploitation
Very significant investments in EGS at global level
Who is in charge? 21 agencies/Departments in this space
Critical that all perceived barriers to investment be removed
Significant jobs potential if quick, well-resourced and ambitious projects are
supported by Exchequer with private investment
Rapid expansion of the EGS sector should be the Government’s over-arching
priority; Green Jobs are a fact not a myth
www.epsconsult.ie
Defining the Sector
 The EGS sector encompasses a very wide range of activities and definitions of
the sector can, and do, differ.
 The US Department of Commerce defines it as those environmental
technologies that "advance sustainable development by reducing risk,
enhancing cost-effectiveness, improving process efficiency, and creating
products and processes that are environmentally beneficial or benign”.
 The European Commission has adopted the OECD/Eurostat definition which
states that: “The environmental goods and services industry consists of
activities which produce goods and services to measure, prevent, limit,
minimise or correct environmental damage to water, air and soil, as well as
problems related to waste, noise and eco systems. This includes cleaner
technologies, products and services that reduce environmental risk and
minimise pollution and resource use.”
www.epsconsult.ie
The Irish EGS Sector
 Air Pollution Control
 Cleaner Technologies and Processes
 Environmental Consultancy
 Environmental Monitoring
 Energy Efficiency
 Energy Management and Auditing
 Marine Pollution Control
 Noise and Vibration Control
 Remediation and Reclamation of Land
 Renewable Energy
 Waste Management and Recycling
 Water Supply and Wastewater Treatment
www.epsconsult.ie
The Green Economy
 Global market estimated at €3 trillion
 Non-energy element valued at $650 billion i.e. four times size of global
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software industry
UK market forecast to be worth £152 billion by 2020
US to invest $140 billion as part of economic stimulus package
EU has approved €105 billion in co-financing for green economy projects; with
€48 billion ear-marked for climate change projects
High Level Action Group on the Green Economy set up (May 2009)
Key growth sectors in Ireland were identified in August 2008 and include:
 Water and waste water treatment
 Renewable energy
 Energy efficiency
www.epsconsult.ie
Venture Capital Activity
 The year 2008 - the coming of age of the “Greentech” or “Cleantech” sector
 Global VC investments was €6.3 billion; up from €4.7 billion in 2007
 The UK was the main source of cleantech investment in Europe, with 40% of all
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European venture capital backed cleantech companies based in the UK
It is estimated that almost half of the UK cleantech deals completed in 2006
received public sector support
With the exception of the water sector, the vast majority of the investment is in
renewable energy (solar, wind and biofuels)
In the US, investment in solar energy has overtaken investment in biofuels
To date, with notable exceptions (including ESB’s Novus Modus, BoI, AIB,
KBC, Dolmen Green Effects Fund, Green Investments), little investment in EGS
sector by VC community in Ireland
75% of VC investments are under £2m (UK, 2009)
IS IRELAND GETTING ITS SHARE OF THIS INVESTMENT AND IF
NOT WHY NOT?
www.epsconsult.ie
Drivers in Renewable Energy/Energy Efficiency
 Climate change
 Energy Security
 Oil depletion
 Aging power infrastructure
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(developed world)
Energy as development bottleneck
(rapidly-industrialising countries)
Energy poverty
(slowly developing countries)
Deregulation: innovation, funds,
entrepreneurship
Breakthroughs in materials science
Low-cost communication
technologies
www.epsconsult.ie
 LEADING TO: Fundamental re-
engineering of the world’s energy
industry around low carbon
solutions and architecture
Drivers – Environmental Consultants’Survey
Which are the most important growth markets for your business?
(Consultants answers only)
Private sector work
Waste management
Public sector work
Climate change/CO2 emissions
Renewable energy
Contaminated land
EIA/SEA
Water/Wastewater treatment
CSR/environmental reporting
Hazardous waste
Air quality/pollution control
IPPC
Cleaner production
www.epsconsult.ie
© 2007 Faversham House Group
Where Will The Jobs Come From? Big Ideas!
 Electric Vehicles
 Retrofitting
 Energy efficiency
 Smart transport
 Wind
 Other Renewables
 Forestry
 Water
 Green Tourism
www.epsconsult.ie
Electric Vehicles
 Potentially the single biggest carbon project for the island of Ireland
 Simon Coveney’s report makes the case
 Key Messages:
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Current level of ambition far too low
By 2030 all cars should be EVs (350,000 by 2020)
Technology developing fast
Ireland the ideal laboratory
8m/tonnes+ reduction in carbon per annum
 Jobs potential arises in relation to:
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R&D for roll-out at EU level
Manufacturing of EVs (EVs cost a fraction of combustion vehicles)
Battery/re-charging infrastructure (including domestic)
Grid connections
WHAT IS THE JOB POTENTIAL OF THIS INITIATIVE?
www.epsconsult.ie
Retrofitting
 Some 1m of 1.5m Irish homes pre-date 1990 (275,000 houses vacant at time of
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2006 census)
Households spend some €2.2 billion on energy (average of €1,600 (2005)) and
emit 11.9Mt of carbon pa; around 8 tonnes per house – twice that of an average
cow!
35% of heat loss through walls and 25% through roof; not technology intensive
SEI’s HESS has budget (2009) of just €49m i.e. a grant of €3,500 for 14,000
homes. Is this enough?
If average cost of typical household retrofit was €7,500 then an investment of
€13.5 billion needed
In addition, public buildings and commercial offices also need to improve their
energy efficiency in line with the NEEAP
Retrofitting is labour intensive, is capable of using Irish materials, will return
40% of spend to the Exchequer: so why then is level of activity so low?
COULD RETROFITTING 2M HOMES/BUILDINGS OVER FIVE
YEARS GENERATE 20,000 JOBS?
www.epsconsult.ie
Energy Efficiency
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Most cost efficient way to reduce dependence on fossil fuels (and consequently to reduce
GHG emissions)
NEEAP (2009-2020) sets out Government’s plans but detailed implementation budget
not announced
Could 2 million smart meters be installed at same time as water meters? (only 2,223
smart meters installed to date (March 2009))
Expanding scope of ACA Scheme would leverage more investment
Potential jobs content of NEEAP (assuming full implementation) should be assessed
Also look to export potential: McKinseys has estimated (2009) that global energy
efficiency investment opportunities could be worth €131 billion
AS MOST ENERGY EFFICIENT EQUIPMENT IS IMPORTED IS
THERE SCOPE FOR MORE INDIGENOUS MANUFACTURE?
www.epsconsult.ie
Smart(er) Transport
 smartertravel>>> sets ambition but specific measures not costed (within
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overall budget envelope of €4.5bn over 11 years)
What is CIE’s carbon footprint and what is being done to invest in public
transport to reduce GHG emissions?
Electrify the Belfast to Cork line and all Dublin and Cork commuter lines using
surplus wind energy
Replace all petrol/diesel vehicles with EVs
Reform legislation to incentive private investors; more buses – more jobs
Promote e-working – quality of life issues a significant issue for commuters
Start planning now for Transport 22 and factor in potential carbon/energy
savings into capital appraisal guidelines
www.epsconsult.ie
Wind
 1,077 Mw connected to the national grid (June 2009) i.e. supply for 700,000
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homes; wind accounted for some 40% of all generation in recent months
2020 target requires another 6,480 Mw
Micro-generation (4,500 units) will also contribute
€16bn + of potential investments in the pipeline awaiting CER approval
Deloitte’s estimate (June 2009) jobs could rise from 1,500 to over 10,000 by
2020.
Turbines account for 75% of total cost
Spirit of Ireland’s wind storage project a major innovation
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Offshore only viable at $200/barrel; hence need for REFIT
Turbine manufacturing opportunity not identified as a priority (Galway’s C&F Group
the pathfinder)
Skills shortages a real problem
Offshore planning legislation (Foreshore Acts) should be replaced by more modern
legislation
www.epsconsult.ie
Other Renewables
 Biomass: Bioenergy Action Plan (2007); BioSpark’s €40m investment in
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Claremorris; GEGA a major player
Biofuels: must be sustainable; in past year algal biofuel projects got $1 billion
in VC investments; bio-refinery and bio-energy competence centres set up
Ocean: AEA Technologies forecast of global market is €200 billion;
Bacon/ESRI study (2005) estimate 1,900 Irish jobs could be created by 2020;
SEI a lead player
Tidal: Ireland’s OpenHydro leading the way
Solar: Genersys Ireland believes solar could cater for 30% of household’s
heating needs; but 10-year payback
Geothermal: GAI examining regulatory framework; also 10-year + payback
HOW MANY IRISH COMPANIES WILL BECOME WORLD
LEADERS?
www.epsconsult.ie
Forestry
 Some 40% of total GHG emissions come from land use (12.2 million cattle
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primarily)
Forests act as a carbon sink hence NCCS target of 5Mt of offsets by 2020 (from
2Mt currently)
Not achievable unless massive increase in annual level of planting; has fallen to
just 6,000 hectares – 20,000 hectares is (1996) target
Has Coilte a conflict of interest?
Has anyone realised that carbon sequestered in forests has a value? (5Mt @
€35/tonne equals €175m per annum)?
Remove the barriers preventing investment
AS FORESTRY CAN CREATE RURAL JOBS WHO IS DRIVING THE
INVESTMENT OPPORTUNITIES?
www.epsconsult.ie
Water
 Water is a finite commodity; global warming will put a price on this scarce
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resource
World Economic Forum Water Project highlights scale of problem
EU WFD the driver
Need one National Authority not 32
Significant additional jobs will be created only when domestic water is metered
NDP (to 2013) spend of €4.7 billion scattered among local authorities; no
economies of scale and unit cost of procurement too high as a result
Very limited R&D activity
Investment Programme for Greater Dublin Region (to 2035) the largest job
creation project
www.epsconsult.ie
Green Tourism
 Consumers are now far more aware of the impact of flying and travelling in
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terms of carbon emissions and are prepared to pay more
Some companies turning this into a business opportunity
Bord Failte published Eco-Tourism Handbook (March 2009)
Airlines should introduce carbon offset products to attract tourists to Ireland
NCC could offer offsets to attract convention visitors
UK’s ICARUS Project helps companies implement a Carbon Reduction
Programme
US car rental companies are offering carbon offsetting
Inchydoney Island Hotel and Spa has largest (80 sq metres) array of solar
panels in Ireland
Carbon offsets could be invested in Irish projects such as forests
COULD IRELAND BECOME A TRULY ‘GREEN’ TOURISM DESTINATION?
www.epsconsult.ie
One Company’s Contribution
The ESB announced the creation of 3,700 ‘green economy jobs’ as follows:
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Smart networking
Smart metering
EVs
Wind energy
Property construction
New technologies
Home insulation
Other
www.epsconsult.ie
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R&D
2020 Vision: Ireland will be at the forefront of energy research supporting the
development of energy efficiency and renewable technologies (NEEAP)
 About €35 trillion will be needed to develop and deploy new clean technologies
between now and 2050 (IEA)
 Not at all clear how much being spent annually on EGS R&D in Ireland
 SEI, including Ocean Energy Development; €7m (2009)
 Charles Parsons Energy Research Awards; €20m over seven years
 EI’s R&D Fund and Competence Centres
 Irish Energy Research Council has identified priority areas (May 2008)
 SFI’s remit now includes sustainable energy and energy-efficient technologies
with a €90m budget (six years to 2013)
 7FP has strong EGS focus
IS THIS LEVEL OF EGS R&D ENOUGH TO ACHIEVE 2020 VISION?
www.epsconsult.ie
Where Will We Get The Money?
 Carbon tax could easily raise €1bn a year
 ETS auctioning revenue available from 2013 and could be worth €630 per
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annum by 2020 (assuming 18Mt of allowances sold at €35/tonne)
Hypothecate monies into a Green Fund(s)?
Go one step further: set up Anglo Irish as a bank with a dedicated mandate to
provide project finance and working capital for Green Economy jobs, and to
trade carbon offsets to support Ireland’s aim to become a Green Economy
Many claims on this windfall so how best to use this green revenue?
Publication of MACC will inform decision-taking
What are your views on this split?
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25% for fuel poverty
30% for retrofitting
15% for REFIT
15% for NEEAP
15% for other green economy incentives
www.epsconsult.ie
What Works In Europe
 The WRAP Capital Grant Scheme (UK)
 The Carbon Trust Enhanced Capital Allowance Scheme (UK)
 Fideme Investment Fund (F)
 Programme for Cleaner Technology (DK)
 Green Financing Measure (N)
 Energy Investment Tax Relief Scheme (N)
 SenterNovem Carbon Reduction Plan (N)
 kfW Bank Programme for investment in renewable energy (D)
(Source: EPS Consulting, August 2008)
WHAT TYPES OF INCENTIVE SCHEMES COULD WORK IN
IRELAND?
www.epsconsult.ie
What Others Are Doing
 US to invest $6.6 billion in green economy R&D
 Siemens have already manufactured 6,400 wind turbines
 Denmark’s wind turbine industry now consists of 200 companies and has a
35% share of global markets
 BP to invest €500m in Energy BioScience Institute (UC Berkeley)
 Austria has a Master Plan for Environmental Technologies and funds sector
and sub-sector EGS networks
 UK’s Commission on Environmental Markets and Economic Performance has
already set national strategy (November 2007); Carbon Reduction
Commitment (which will save business £1 billion by 2020) and Low Carbon
Industrial Strategy launched
IN CONTRAST, IRELAND HAS JUST SET UP A HIGH LEVEL
ACTION GROUP ON THE GREEN ECONOMY; WE ARE WAY
BEHIND OUR COMPETITORS
www.epsconsult.ie
Sources
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EPS Consulting report on EGS sector:
www.epsconsult.ie/news/greeneconomy
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NEEAP: http://www.dcenr.gov.ie/NR/rdonlyres/FC3D76AF-7FF1-483F-81CD52DCB0C73097/0/NEEAP_full_launch_report.pdf
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Smarter Travel:
http://www.transport.ie/upload/general/11284-0.pdf
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Simon Coveney’s EV report:
http://www.oireachtas.ie/documents/committees30thdail/jclimate_change/reports_2008/20090428.pdf
www.epsconsult.ie
Think About It
Business must become green to grow and to do this it is necessary to include
climate change policies into corporate DNA (CBI, November 2007)
Whatever uncertainties exist regarding future oil production and project
demand growth, the ultimate effect will be that the price will at first escalate
and then soar (International Energy Agency, 2008)
The development of alternative energy should create more than 20 million
jobs globally, with 3.5 million green jobs possible in Europe and the US in the
area of energy efficiency alone (ILO, September 2008)
I realise that there are those out there who say that these plans are too
ambitious. To them I say that the challenges we face are too large to ignore
(Barack Obama, March 2009)
www.epsconsult.ie