Newsletter #2

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Consumer segmentation: Research from the Henley Centre and Marks and Spencer

Monday 1 October 2007 in Newsletter #2 by Chris Goodall | No comments

Many companies selling to UK families have a strong sense that consumer demands are shifting rapidly. M&S recently talked to Carbon Commentary about its perceptions of changes in attitudes and behaviour. This article compares its results with those of a survey by the Henley Centre in summer 2007.

During the last year or so, the percentage of ‘green zealots’ in M&S research has risen from 3-4% to nearer 8%. Henley also sees a figure of 8% for the two greenest groups ‘principled pioneers’ and ‘vocal activists’. A further 31% (Henley Centre) or 30-35% (M&S) are actively concerned and want to adjust their behaviour. There has also been a big growth in this group in the last year.

In both surveys another third are aware of environmental and ethical issues, but are unlikely to take active steps unless pushed. A final quarter or so don’t care very much. M&S says that they are ’struggling’. Henley calls them ‘disengaged’.

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Domestic Combined Heat and Power

Monday 1 October 2007 in Newsletter #2 by Chris Goodall | 13 comments

Ceres Power, a £150m AIM-listed company, recently demonstrated its new Combined Heat and Power product. This power plant is targeted at ordinary domestic homes. Combining an efficient central heating boiler with a fuel cell that converts gas to electricity, the new product has excited the City. Ceres is extremely optimistic about sales of the device, based on the cash and carbon dioxide savings it says can be achieved.

The Ceres fuel cell (on the left) is incorporated into an ordinary domestic condensing boiler (on the right)

Ceres promises reductions in utility bills of £300 a year and 2.5 tonnes savings in carbon dioxide for the typical UK house. Our short report shows why we think that these savings are unlikely even in the most appropriate UK installation. In fact, the emissions reductions are likely to be minimal and the reductions in the electricity bill will not easily justify the approximately £1,000 extra cost of the CHP cell.

Micro CHP is a difficult proposition. Other companies have found that it is hard to make substantial savings in domestic installations. CHP is not well suited to rapidly fluctuating and unpredictable demand for electricity and hot water.

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Geo-engineering

Monday 1 October 2007 in Newsletter #2 by Chris Goodall | 1 comment

Some scientists think that the world’s halting attempts to reduce carbon emissions are bound to fail. So they have proposed various schemes for counteracting the global warming impact of fossil fuels. The Gaia scientist James Lovelock proposed an unusual and untested idea in a recent paper. He suggested that we install millions of pipes to bring nutrient-rich water to the surface to feed carbon sequestering organisms. Other scientists are working on schemes as diverse as mirrors that reflect part of the sun’s energy, increased aerosol pollution to stop sunlight getting to the earth, and improving plankton growth by adding iron to the oceans.

All these schemes are ‘offsets’; they seek to counter-balance the impact of human activities with schemes to reduce CO2 elsewhere. The technology optimists believe that one or more of these techniques can completely counteract human effects. The cost often seems very reasonable – in the billions rather than the trillions – and the technological challenges seem not insuperable. The pessimists say these schemes will have huge unintended effects, possibly worse than climate change itself, and that toying with ‘geo-engineering’ projects, as they are called, simply delays the day that the world starts to realise it must cut fossil fuel use. Geo-engineering deals with the symptoms, not the causes, of global warming. And none of the proposed schemes deal with the adverse effects of higher CO2 concentrations, such as increased ocean acidity.

This article argues that all the major geo-engineering proposals have substantial pitfalls, but that it makes clear sense to increase the research funding into these schemes. The opponents and proponents of geo-engineering have got locked into an almost theological debate as to the ethics of climate modification but this argument should be secondary to the need to have well-defined back-up plans in the event of increasingly rapid deterioration of the global climate.

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The eco-homes at Bladon, near Oxford

Monday 1 October 2007 in Newsletter #2 by Chris Goodall | No comments

New UK housing has insulation standards that do not come close to matching the best northern European levels. Individual homeowners and ethical investors have built single ‘eco-homes’ but a small new development in Bladon, Oxfordshire is among the first to be speculatively built by a mainstream housebuilder.

The new houses are not ‘zero-carbon’ and do not use the Passiv Haus technologies pioneered for low-emissions housing in Germany. But they are a substantial improvement on most mass-produced homes. Will they make the builder more money? No, says the company, but the experience it has gained will enable it to build eco-homes at a more competitive price in the future. These nine houses each cost over £40,000 more than their draughty Persimmon equivalents. The builder expects the price premium to be slightly less.

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Straws in the wind: The Lib Dems’ climate change paper

Monday 1 October 2007 in Newsletter #2 by Chris Goodall | No comments

Both the Conservative and Lib Dem parties have produced position papers on climate change in the last few weeks. The Conservative document is over 500 pages long but contains very few specific proposals. To be harsh, it is little more than a prolonged agonising over whether the climate change problem can be addressed using conventional free-market mechanisms. The Lib Dem paper is a tenth of the length but does contain the outlines of a coherent set of policies.

This article analyses the Lib Dem proposals. It shows that the Lib Dems are prepared to use the price mechanism to choke off increasing demand for aviation. The party also contemplates extending the Emissions Trading Scheme beyond the 50% of the economy currently covered. On the other hand, it makes completely clear that it has no intention of raising the prices of energy and fuels to domestic consumers.

Although the party presents itself as the only UK political institution ready to grasp the need for an economy-wide carbon price that will bring down emissions by 30% in 2020, the detailed proposals are far less radical. In the material that follows, I try to tabulate the Lib Dem ideas, focusing on whether they use price, regulatory fiat or pious hope as the proposed means of emissions reductions. As in the Conservative paper, estimates of the costs and benefits of their policies are almost completely absent from the Lib Dem paper. It is a shocking commentary on British politics that no major party is prepared to quantify exactly how it proposes to shift taxes towards polluting activities and away from other sources.

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Tesco vs. Wal-Mart vs. carbon emissions

Monday 1 October 2007 in Newsletter #2 by Chris Goodall | 1 comment

The rivalry between Tesco and Wal-Mart is well known. Tesco’s imminent entry to the US heartland of the world’s largest retailer may have created an extra edge to the battle. And, unsurprisingly, the two giants are squaring up over carbon issues as well as over such things as employee conditions and global sourcing policies.

Tesco said earlier this year that it would eventually put carbon labels on all its 70,000 food lines. It has been trying to find way of doing this using Life Cycle Analysis, putting a greenhouse gas cost on every element of a product’s move from farm to plate. This was always a hugely over-ambitious project and recent weeks have seen the company drift back from its early optimism. Now Wal-Mart has come up with a similarly impossible dream – to use the Carbon Disclosure Project (CDP) to assess and manage the energy footprint of its suppliers. These big retailers know that they have to be seen to be doing something about greenhouse gases, so they have both launched incomplete schemes that will achieve little.

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