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Reflections on 2020 and Predictions for 2021

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By Carl Ennis (pictured), CEO Siemens and Smart Infrastructure, GB&I

Since becoming CEO in December, most of my life has been dominated by Covid-19.  But despite causing many difficulties, the pandemic has brought some good. It has accelerated the pace of change and given us valuable insights into where – and how – we will work in the future, the skills we will need, and the environmental challenges we face.

It has also provided distraction from Brexit, which I hope will move the discussion away from its rights and wrongs to focus on how the country can maximise any opportunities in the year ahead.

In the new future many people will continue to work from home if they can do so effectively, while offices will become places to meet. At Siemens, like much of the UK business community, we have found that intercontinental flights and getting together in person is not as essential as we thought. We now run strategy workshops and town halls online, and even festivals where we engage with all our employees. I predict that these ways of communicating with each other and groups of people will continue.

One of the many benefits of this working model is accelerated decarbonisation, which we urgently need. Our economy was almost crippled during the first lockdown, yet CO2 emissions reduced by just 20% and NOX by 40%. Strategies to increase decarbonisation will be central to discussion at next year’s UN Climate Change Conference, COP26, in Glasgow, in which I hope President-elect Biden’s administration will play a crucial role. Having the US agree that climate change is a real risk, with its scale and ability to influence global policies, will help the world address the issue.

My worry for the UK is that in the government’s enthusiasm to kick-start the economy, we will do what is easy or cheap rather than what is right. But instead of trying to generate short-term jobs we must “grow back green” and invest in long-term jobs that help decarbonise.

The government is also focused on identifying a couple of big things it can do to achieve the decarbonisation targets. These large-scale projects, such as investing in wind power and hydrogen, are important. Wind power is already generating more than 20% of the UK’s electricity, and hydrogen has huge potential for fuelling vehicles and trains and for replacing natural gas in home heating systems and industrial turbines.

But local initiatives are also essential if we are to meet our net zero carbon targets. That’s why Siemens has been helping local enterprise partnerships (LEPs) and local governments address energy challenges in transport, industry and infrastructure. Individuals need to get involved too. The old adage of environmentalists is “reduce, reuse, recycle.”  Reducing consumption requires all 66m people in the UK to participate.

I believe the shock that the virus has delivered to our economy will speed up digitalisation across industry. We will build a digital environment which will become central to everything we do. Unfortunately it will be painful for many sectors and businesses, but in the mid to long term it will be positive. History shows that when countries go through industrial revolutions there are winners and losers, but overall in the end everyone’s a winner.

We know that our businesses will be very different 10 years from now. A statistic that always astounds me is that 80% of the employees that we will have in 2030 are with us today. So while entry-level skills for apprentices and graduates matter, the existing workforce will need to re-skill too.

Adult learning is crucial and has gone unaddressed in the UK for too long. Covid-19 and Brexit have reinforced the need for us to develop and change our skills. This is not just about technical expertise — soft skills and vocational work will become increasingly necessary.

The fact that the virus pushed Brexit down the hierarchy of news was probably helpful. Anybody who’s been involved in negotiating a big deal knows you don’t want to do it on a public stage. The challenge is how to unlock the benefits people wanted without causing damage in the short term for individuals, society and business.

The negotiating teams have been trying hard to do that, and while time is short, most deal-making is done in the eleventh hour, so I remain hopeful. The gap between both sides is probably quite narrow, but a deal is essential for stability. Anything that goes above WTO arrangements will be positive.

President-elect Biden has been clear on his desire that the UK government does not implement changes that destroy the Good Friday agreement. We must not put that at risk. My father was from Dublin so I know first-hand how important the island of Ireland is to the Irish and our shared culture.

It’s going to be tough. From a business perspective, erecting barriers to trade is never a good idea. Brexit is likely to result in friction between us and our biggest trading partner, mainland Europe. That will present a challenge, but we’ll have to make the best of it. Luckily, as a nation we’re pretty good at triumphing over adversity and our business people are entrepreneurial.

Meanwhile, Brexit hasn’t stopped Siemens investing in the UK. In Hull, we partnered with Associated British Ports in a £310m investment to build a wind turbine blade manufacturing facility creating 1,000 jobs. And now we are spending £200m in Goole on a train facility to build the next generation of underground trains with 700 new jobs.

We still see the UK as a vibrant place and will continue to invest. While we would rather the added level of complexity of Brexit wasn’t there, it’s not stopping us from doing business.

But it will make life difficult for those of our suppliers and partners with vertically integrated supply chains in continental Europe and those who are trying to sell their products there. A brave person might make predictions about where they will be in a year’s time. But I will put my crystal ball aside for now.

INDUSTRY SPOTLIGHT: Future Motors

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By Future Motors

Future Motors is a young, vibrant business revolutionising energy consumption with an electric Switch Reluctance Smart Motor. It is designed for easy retrofit into existing HVAC, refrigeration, pumping and equipment currently using an induction motor.

With payback less than 3 years, this energy efficient, cost-effective and environmentally-friendly, patented design features a bespoke, intelligent IoT-driven software controller, for a supremely controllable motor at a much reduced lifetime cost.  It’s built-in software and connectivity provides constant real-time monitoring of energy use, speed, torque, and temperature which allows automatic diagnosis of HVAC system issues. This connectivity can be via your existing BMS or via the cloud.

Contact us to learn how Switch Reluctance Smart Motor systems can energise savings for your business.

www.futuremotors.co.uk

You’ve done as much as you can with short payback, what else can you do?

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By David Kipling, OnSite Energy

Many companies have by now committed to energy reduction targets either through sustainability policy, net zero goals, CO2 emissions reduction targets or via CCA agreements. Further energy efficiencies are going to be needed, as the targets are getting tougher. For CCA, renewables don’t count, it is only efficiency that is eligible.

Where efficiencies can be found will depend on your company’s existing processes and sources of energy. 

The good news is there has never been so much innovation in energy technology.  Costs are falling and the range of applications and efficiencies are improving.   So if you appraised a technology three or more years ago, its probably worth revisiting that appraisal to take account of current pricing and improved efficiencies.  

At OEP, we take a data-led, technology agnostic approach.  We can often add-value by introducing technologies and solutions that hadn’t been considered, from artificial intelligence & internet of things sensing, to the latest heat recovery, absorption chillers, or wind technology.

If this sounds interesting then please get in touch with David Kipling at david@on-site.energy or call him on 07824 018991.  OEP specialises in supporting energy intensive industry.

INDUSTRY SPOTLIGHT: Future Motors electric Switch Reluctance Smart Motor

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Future Motors is a young, vibrant business looking to revolutionise energy consumption in the UK and EU. We are doing that with an electric Switch Reluctance Smart Motor designed for use in in HVAC, refrigeration, pumping and most equipment that currently uses an induction motor.

Energy efficient, cost-effective and environmentally-friendly, the patented design features a bespoke, intelligent IoT-driven software controller, for a supremely controllable motor at a much reduced lifetime cost.  Its built-in software and connectivity provides constant real-time monitoring of energy use, speed, torque, and temperature which allows automatic diagnosis of HVAC system issues. This connectivity also allows remote controllability to maximise energy efficiency and enable demand-side management to avoid higher energy tariffs and enjoy demand side response revenues.

Don’t just take our word for it. wilko, one of the UK’s largest family owned DIY, homeware and garden retailers, is rolling out a nationwide upgrade programme for all the electric motors that drive HVAC air conditioning systems in its stores. Following an extensive and successful trial period, the retailer has invested in nearly 400 patented Switch Reluctance Smart Motor systems, manufactured by newly rebranded Silicon Valley-based Turntide Motors. An audit of motors performance during this roll-out measured average energy savings of 42% which outperforms the expected savings and gives a simple financial payback of less than 3 years.

The average C02 saved per unit in the trial equated to 2.4 tonnes, with a kilowatt saving per unit of 7,780 KWhrs, when compared to the incumbent electric motor systems. When scaling these savings across wilko’s total install base of electric motors, the estimated savings are substantial – 918 tonnes of C02 and 2.97 gigawatt hours throughout the lifecycle of the motors.

Adopting this approach to energy saving also enables operations to work towards the UK government’s goal of Net Zero carbon emissions by 2050. It promotes the view that creating a better future for society is a better future for business.

To learn more about why we agree and how Switch Reluctance Smart Motor systems can energise savings for your business book your one to one meeting.

www.futuremotors.co.uk

How would your business benefit by achieving net zero earlier than its competitors?

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By Onsite Energy Projects

Customers, investors, the planet want business to be more sustainable and to achieve net zero. Achieving net zero will require energy efficiency, a strategy based on data, innovation and funding.  

The start point is data –what is causing your energy consumption, how is it controlled, how is it bought, what is its carbon footprint, what is the baseload, the peak, when does it happen ?  Also how does your consumption compare to similar businesses … what are your kWh consumed per m2, per m3, is it affected by outside weather ?  Could that indicate outdated plant ? Data is the start point to identify opportunities.  

We can provide a free review of your energy data and provide those insights that can help you start the net zero journey.  We can also help with innovation and even funding the measures, to enable you to achieve net zero sooner.  How would your business benefit if you could achieve net zero earlier than your competitors ?

If this sounds interesting then please get in touch with David Kipling at david@on-site.energy or call him on 07824 018991.  OEP specialises in supporting energy intensive industry.

Europe bets on green deal to drive Covid-19 recovery

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By Indranil Ghosh, Founder, Tiger Hill Capital

The European Green Deal has always been a highly ambitious plan that targets a 50-55% reduction in EU CO2 emissions by 2030 and carbon neutrality for the region by 2050. But now that it’s become the centerpiece of the EU’s Covid-19 Recovery Plan, 25% of the total 2021-27 recovery budget will be allocated to Green Deal initiatives which are viewed as a powerful job creator in a time of rising unemployment. 

Through the Green Deal and a series of upcoming reforms to the financial system, the EU will lead the world in implementing a comprehensive regulatory and investment framework to drive the transition to a zero-carbon economy. Furthermore, as outlined in a July 8th report ‘Towards a Hydrogen Economy in Europe: a Strategic Outlook,’ the EU is taking a bold stance to put clean hydrogen at the center of its transition plan. 

European Green Deal: A Comprehensive Regulatory Package 

Under the European Green Deal, the European Commission is undertaking a detailed review of all regulations to promote low-carbon technologies and phase out carbon intensive assets. 

New directives will accelerate the deployment of renewable energy, energy efficiency initiatives, and emissions trading markets. The transport sector will be under pressure to achieve zero emissions by the 2030s, while industrial sectors will be required to use less materials according to new circular economy policies. Proposals are also expected for a carbon border tax to protect EU companies against unfair competition from other regions with lower environmental standards. 

Central to the Green Deal is to invest heavily into the hydrogen economy so that it accounts for at least 13-14% of the EU’s energy mix by 2050, and possibly up to a quarter. The EU views clean hydrogen—hydrogen produced from the electrolysis of water using electricity generated from renewable energy sources—as a key vector for energy storage and transport, as well as in an energy grid with a growing proportion of intermittent energy sources like wind and solar. Clean hydrogen would also be a zero-carbon feedstock in industries like steel, ammonia, and other chemicals. 

The European Commission estimates that up to €180 billion could be invested into clean hydrogen production by 2050, with public funds helping to catalyze that figure. Germany, the region’s economic engine, has committed €7 billion for new businesses and research so that it can reach its national plan for 5GW of hydrogen production by 2030 and 10GW by 2040. 

In another key initiative, the EU will reform its Emissions Trading System (ETS), whereby companies must buy permits to emit carbon emissions, so that it better incentivizes renewables, such as by increasing the carbon price. The proceeds from the ETS will be put into an Innovation Fund which will make €10 billion available to support the development of low-carbon technologies. 

Re-wiring the Financial System for Sustainability

To support the transition to a zero-carbon economy, Europe is also leading the way in re-wiring its financial system for sustainability. In 2019, the European Commission issued non-financial reporting guidelines for banks and insurers, based on the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). Under these guidelines, banks and insurers will have to report how they expect climate change to affect their financial performance as part of their annual financial filings. It is likely that these guidelines will be converted into ‘hard’ regulation in the next few years. 

The European Central Bank (ECB) has also indicated that it will integrate climate risk into the 2022 European Banking Authority stress tests. Since emissions are highly concentrated in a few companies—for example, three energy companies (RWE, E.ON, and ENBW) account for 38 percent of theCO2 emissions of Germany’s 250 largest emitters—the worst offenders will be quickly highlighted and face a higher cost of capital unless they take mitigating actions.

Furthermore, the EU is taking steps to ensure that investors’ environmental, social, and governance (ESG) preferences are considered before their capital is deployed. Under amended MiFID II rules, the EU will make it mandatory for asset managers, insurance companies, pension funds, and financial advisers to determine their clients’ ESG preferences and to recommend products and services which are suitably aligned. They will also be required to report how sustainability risks are expected to impact investment returns. These changes could come into effect in as little as a year-and-a-half

Finally, by the end of 2021, the EU’s ‘Taxonomy Regulation’, which specifies what investments can be classed as sustainable, will also come into force. This should significantly reduce ‘greenwashing’ and give investors more confidence to invest in green assets. 

The Challenge of Stranded Assets

Due to the direct physical risks of climate change or risks associated with the transition to a low-carbon economy, investors are increasingly realizing that many assets may become ‘stranded,’—unable to earn an economic return some time prior to the end of their economic life. 

The highest concentration of stranded assets lies in climate-exposed real estate and industries dependent on fossil fuels like hydrocarbon extraction, non-renewable power generation and utilities, petrochemicals, and transportation. 

In these sectors, we can expect more casualties such as the US utility PG&E, which filed for bankruptcy in 2019 due to damage caused by a spate of Californian wildfires induced by climate change. Other industries with high carbon dioxide emissions like steel, cement, textiles, and agriculture (especially animal husbandry) are also in the firing line. 

Stranded assets are also leaving their mark on financial portfolios. In the last decade, BlackRock’s investments in fossil fuels have lost investors $90 billion. Banks, mortgage companies, and insurance companies are also feeling the pressure. According to Aon, 2017 and 2018 represented the costliest back-to-back years for insurers on record for weather-related disasters. 

If Europe provides a window into future global action on climate change, the 2020s could be a decade in which a large-scale capital shift leaves a multitude of stranded assets in its wake. For example, almost 30% of the Fortune 500 consists of companies in the energy, industrials, transportation, and logistics sectors—most with considerable carbon exposure. 

However, unless the pipeline of green projects is greatly expanded, investors could be left scrambling to redeploy capital into a limited set of ‘climate-proof’ assets. For example, clean hydrogen represents just 1% of current hydrogen production, with 76% coming from natural gas and 23% from coal. That’s why initiatives like the Clean Hydrogen Alliance, also officially launched on July 8th, will play a critical role. The Alliance will build a pipeline of large-scale investment projects in clean hydrogen, and identify technology needs and regulatory barriers holding back large-scale projects. 

The European Green Deal is rightly the centerpiece of the EU’s vision for its future. Not only will it be vital for helping to keep global temperature rises below 2°C, it will also be a powerful lever to help the region recover economically from the pandemic. 

About The Author

Indranil Ghosh is an MIT-trained scientist, sustainable investor, author, and strategic advisor to governments and leading global corporations. Prior to founding Tiger Hill Capital in London Ghosh was Head of Strategy at Mubadala, Abu Dhabi’s Sovereign Investment and Development Fund and held senior roles at Bridgewater Associates and McKinsey & Co. His new book is Powering Prosperity: A Citizen’s Guide to Shaping the 21st Century – https://www.tigerhillcapital.com/powering-prosperity

Image by Free-Photos from Pixabay 

WHITE PAPER: Why Net Zero is so hard to achieve

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By Simon Potts, Managing Director, Future Motors

The UK government’s aim is to get carbon emissions to Net Zero by 2050, placing ‘clean economic growth’ at the heart of its industrial strategy. With the stakes so high – environmentally and economically – why has the move towards net zero been so hard to achieve and why have UK businesses been so slow to grab hold of the opportunity the green tech revolution offers? 

Download the latest Future Motors Discussion PaperWhy Net Zero is so hard to achieve’ to find out how small changes in your business can make a big impact on your net zero commitment. 

Derwent fm takes positive action for World Environment Day

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By Derwent fm

Derwent fm are proud to announce the bold steps we are taking on climate action by signing up to The Climate Group’s business initiative on efficient energy (EP100).

Derwent are joining the EP100 project through the energy management pathway. We have committed to reduce our energy consumption by 40% through our energy management system by 2050. This is based on our 2019/20 baseline year.

Derwent fm are one of the first facilities management companies to sign up to EP100. Joining this initiative is a major step towards helping us deliver our strategy and achieve our goals.

Janice Boucher, MD, Derwent fm, said: “Following our implementation of an energy management system and accreditation to ISO 50001, we wish to join other energy smart companies with a commitment to accelerate improvements in climate change. We are passionate about exploring energy efficient technologies and driving cultural change to reduce emissions, costs and combat climate change.”

Can you improve your CHP investment?

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By Onsite Energy Projects

Have you invested in CHP in the last 3-4 years, or are you considering it ? If you haven’t yet, we may be able to provide a zero capex solution delivering significant savings.

If you have already invested, we may be able to help improve returns and reduce your business costs even more by helping you use all the power generated more efficiently.  Likewise if the performance or availability of the CHP has disappointed, we can assist with practical advice and review or renegotiate contract terms.

CCL costs on gas are set to rise by 90% by 2025.  So unless you qualify for an exemption (such as a  climate change agreement), you are going to see your returns eroded.  To those who are “power only” out there, it’s time to think out of the box and ensure you use the heat productively. We can help.

We specialise in making use of the waste heat from CHP or other busines processes.  Technologies to use heat productively now mean that in the right conditions we can use waste heat to produce as low as -40oC (to replace blast freezing, cold stores) or as high as 300oC (furnaces, cooking and frying), and pretty much everything in between, allowing us to reduce energy costs even further.

We can provide a free review of CHP performance, operating costs and options for improvement.

In the right circumstances, we could even purchase your existing CHP and provide discounted power back to you – so you still keep some of the savings and resilience benefits but also release cash for your core business in these challenging times.

This is the reason Onsite Energy Projects exists – we help businesses innovative, and implement the full potential of both energy efficiency and on-site generation measures.  We recognised the challenge of capex availability and can provide a no-capex, off-balance sheet solution.

If you would like to know more email us at info@on-site.energy or call on 0161 444 9989.

Onsite Energy Projects provides energy savings and energy generation solutions to energy intensive businesses, without capex if required.

INDUSTRY SPOTLIGHT: Energy Management from Derwent FM

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By Derwent FM

Energy management is fast becoming the key area of focus in facilities management. As the effects of human impact on our climate and environment become ever more apparent and visible, all stakeholders have their agenda.

We are now seeing real investment in environmentally focused projects such decarbonising heating systems, reducing environmental impact for clients but also crucially saving them vast amounts of money. Therefore, pleasing both shareholders and customers.

This will be the key issue over the years to come, it is crucial that businesses adapt and focus on this today.

For more information on how Derwent FM can help with your energy needs, visit https://www.derwentfm.com/service/full-utilities-management/