10 green business predictions for 2015
10 green business predictions for 2015
This article first appeared at Business Green.
It is the nature of the global fight against climate change that every year is more important than the last, but at a national and international level 2015 promises to be a truly critical year for the green economy.
Several crucial turning points loom where the U.K. and international community could opt to accelerate efforts to curb global emissions or alternatively could choose to throw encouraging recent policy progress into reverse. In the U.K., May's general election should determine whether a new wave of ambitious domestic green policies is embraced. Meanwhile, December's Paris Summit provides a focal point for green businesses and campaigners everywhere, holding out the promise of a new global climate change treaty or the final death knell for the multi-lateral approach to climate risks.
My bet is the growing appeal of clean technologies, the mounting calls from businesses for climate action to be prioritized and the escalating visibility of climate threats mean the green economy will continue to make progress throughout 2015 and beyond. But the U.K. election, the Paris Summit and the huge unanswered questions posed by the collapse of oil prices will inject more volatility into the green business outlook than at any point in the past five years.
Against this backdrop of inherent and growing uncertainty, here are 10 predictions we can make for 2015, with varying degrees of confidence:
1. Renewables records will keep falling
One thing we can predict with near complete certainty is that 2015 will see a host of renewable and clean energy records fall. Renewables capacity is increasing on almost every part of the planet, meaning renewables generation and energy share records will continue to tumble.
In the U.K., various renewables records are broken on an almost weekly basis during the windier months of the year, while recent falls in coal generation means emissions records also are being broken. From a global perspective, the most important records are being set in China, where the march of renewable power has meant the government is able to predict that emissions will peak by 2030.
However, while renewables capacity and generation records are encouraging, the really exciting development will be made in clean energy labs. Scientists are quietly making impressive progress increasing the conversion efficiency of solar cells, with some projects working on thin film cells that could deliver 40 percent efficiency at ultra-low cost. Similar progress is being made with wind energy in the form of giant offshore turbines and even high altitude kites.
Renewables march into the mainstream will continue throughout 2015.
2. Green investment will make important strides
Green investment has faced a series of significant challenges throughout the global economic downturn, and the collapse of oil prices could present one of the biggest challenges yet. At the same time there are encouraging signs that green investment is starting to enter the mainstream.
For example, the green or climate bonds market exploded last year, hitting around $40 billion, and there are credible projections it will top $100 billion this year. The implications for clean energy and low-carbon infrastructure funding could be transformative.
The promise of Green ISAs, the growing popularity of crowdfunding and the likelihood that more big name investors will join the fossil fuel divestment trend suggests 2015 will see environmental considerations get an ever greater hearing among the investment community.
3. Formula E will come to London — and it will be great
On June 27, the Formula E series will bring the inaugural electric car racing series to London, bringing with it some of the world's most exciting race cars and a flurry of green publicity.
The Formula E electric-car racing series goes to London in June.
The series has enjoyed an impressive start and the excitement generated by the city race further will underline the technical maturity of electric cars, not to mention their burgeoning consumer appeal.
As a marketing opportunity for a sector experiencing exponential growth, it is hard to think of anything better.
4. Obama (and Clinton) versus the climate sceptics
The Republicans' victory in November's mid-terms paves the way for the mother of all Beltway battles over U.S. environmental policy.
Obama has used every opportunity to emphasize that he is up for the fight. His approval ratings may be in the doldrums, but while the media has criticized him he quietly has gone about building an impressive green business legacy. The U.S.-China climate pact is banked, a deal with India is in the cards, the EPA is working on emissions standards and Keystone XL could be blocked.
However, with Congress under Republican control and the party's leadership clinging to its climate sceptic talking points, the GOP has a platform to challenge almost every aspect of Obama's environmental strategy. Obama's decision to use executive action to deliver climate policies and investment means he should be able to face down his critics and continue to drive green growth, but political rows over the environment will provide a constant backdrop throughout 2015.
Crucially, given the 2016 presidential race in many ways already has started, Hillary Clinton has signalled she fully endorses Obama's climate change strategy.
5. U.K.'s carbon capture uncertainty finally to be brought to an end
It has taken an entire parliament and some, but this year should finally see the U.K. government award its long-promised £1 billion funding competition to one of two proposed carbon capture and storage (CCS) projects.
Leaving aside the understandable frustrations over the delays the sector has faced, a decision promises to provide a major boost to the nascent sector. Add in the prospect of some eventual progress on EDF's planned new nuclear plant Hinkley Point and the U.K. finally may take a step towards the clean energy triumvirate of renewables, nuclear and CCS that the government long has insisted will deliver on decarbonization targets.
6. A fair wind for offshore wind energy
Renewables records will be set in 2015, but the sector as a whole will face a tumultuous 12 months with the election likely to play a major role in determining the medium-term future for the onshore wind, solar and biogas sectors. However, one part of the industry is likely to deliver some encouraging progress this year: offshore wind.
Offshore wind promises to make big progress this year despite facing significant challenges.
All three main parties are backing the sector and with Siemens moving forward with its plans for a Hull factory and Vestas manufacturing blades on the Isle of Wight, a U.K. supply chain is fast taking shape. Moreover, the emergence of giant 6MW to 8MW turbines and exciting trials for floating turbines hold out the promise of falling costs.
The sector continues to face significant challenges, not least concerns the government's Levy Control Framework funding pot only has enough cash in it for a handful of the projects in the pipeline. However, the award of early contracts through the government Final Investment Decision mechanism means a host of new projects should get the green light this year.
7. More big brands to embrace climate action
Every year sees the ranks of businesses seriously committed to climate action and the green economy swell, and there is no reason to think 2015 will be any different.
Unilever, IKEA, Nestlé, Marks & Spencer, IBM, Siemens, GE, Nissan and myriad other blue-chip firms pursuing ambitious decarbonization or clean tech policies will be joined by others.
One of the most intriguing aspects of last year saw E.ON confirm it was splitting into a high- and low-carbon business. Will other utilities follow suit?
Similarly, will more firms emulate Unilever and tire of the green policy blocking tactics used by business groups such as BusinessEurope?
The remarkable way in which the green consumer market has continued to prosper throughout the economic downturn, huge public support for clean energy, growing awareness of climate risks and the simple desire of CEOs to leave a positive legacy means the likely answer to both questions is yes.
8. Green building, coming to a street near you
Energy efficiency policies have endured the proverbial roller-coaster ride over the course of this parliament, but there are encouraging signs that 2015 could see progress made on a number of fronts.
First up, the introduction of the Energy Saving Opportunity Scheme will focus minds at 10,000 firms across the U.K., highlighting the areas where energy savings are possible in much the same way that the Carbon Reduction Commitment scheme prompted larger businesses to take efficiency more seriously. There will be grumbles about the administrative burden (when are there not?), but the requirement to carry out an energy audit inevitably will help many mid-sized firms unlock cost-effective energy and carbon savings.
Green buildings will continue to sprout up this year.
There are some encouraging signs the Green Deal is finally starting to gather pace, even if this progress is more than offset by growing concerns about the health of the accompanying ECO market.
Most important of all is the manner in which green building innovations are becoming normalized across the industry. New and retrofitted offices increasingly include building management systems, LED lighting and even onsite generation as standard. Modern homes are following in their wake as early adopters start to embrace clean technologies. Expect to see more genuinely low carbon buildings.
9. Election 2015 puts green policies on a knife edge
The policy uncertainty faced by many green businesses becomes clear when you consider the number of credible parliamentary permutations presented by May's election.
Just consider a handful of scenarios the polls suggest are reasonably likely.
A narrow Conservative victory would mean an end to new onshore wind farm development in the U.K., while further restrictions on solar farm development would be likely — green business investors inevitably would suffer. Prime Minister David Cameron would face intense pressure from some backbenchers and ministers to deprioritize decarbonization or even scrap the Climate Change Act. Meanwhile, the few remaining modernizers would urge him to honour the U.K.'s climate targets and deliver a credible strategy for cutting emissions through the 2020s. With a narrow majority, keeping both camps happy would be all but impossible. Throw a potential coalition with UKIP or Northern Ireland's unionists into the mix and pressure to scrap environmental policies could become even more pronounced.
A continuation of the Conservative-Lib Dem coalition would infuriate the base of both parties, not to mention a large chunk of the electorate, but it presumably would enable the continuation of the government's current mixed bag of green policies — assuming a bout of regicide does not quickly disrupt the balance of any new coalition.
In contrast, a narrow Labour victory (or a coalition with the Lib Dems or Greens) would result in a new wave of green policies, including a flagship package of measures to tackle fuel poverty and a decarbonization target for 2030. However, environmental campaigners have noted there is little evidence Labour would differ much from the Tories when it comes to road and airport building or tax cuts for North Sea oil and gas.
Barring pre-election flooding, climate change is unlikely to play a central role in the election, but the considerable difference between the two main parties on clean energy coupled with the remarkably tight polls mean green businesses and investors will face considerable political risk and uncertainty during the first half of 2015 — uncertainty that could extend throughout the entire year if, as looks entirely possible, the election does not deliver a clear result.
10. Late nights in Paris
The prospects of an ambitious climate treaty being agreed in Paris in December remain as tricky to read as ever. The foundations for a deal based on individual nations' climate commitments are in place, but unresolved (and potentially irresolvable) differences over historic responsibilities, climate funding and independent emissions auditing mean the high-stakes talks could be blown apart at any time.
Optimistic predictions that a deal will be reached that commits all the major economies to increased low-carbon investment and gradual emissions cuts appear well-grounded. Such a deal would represent a boost to green businesses around the world and undoubtedly would unlock increased low carbon infrastructure spending.
However, the dysfunctional nature of the perennially over-running talks, the extent to which low oil prices are fomenting uncertainty in producer nations, and the unanswerable warnings that the draft agreement already looks staggeringly weak all mean that no one should be counting their chickens ahead of those long nights in Paris.