Tuesday, 30 November 2010

Smart Eco-Design can change consumer behaviour driving Green Growth

Richard Lambert, Director General, CBI
 At the CBI Climate Change Summit in November Richard Lambert explained that there was still a big opportunity for more businesses to use design to change people's behaviours and buying habits.

He stated, "the process of capturing the public's imagination has hardly started. There is no sense of excitement.... Not enough breakthroughs to excite consumers for them to drive the market.
"Businesses need to demonstrate that switching will benefit families and improve quality of life by making it real for them."

He added, "Martin Luther King didn't get to where he got by saying 'I have a nightmare'. There was a sense amongst consumers that they simply were not going to buy more expensive products just because they would have a better carbon footprint. Whilst white goods companies were doing things differently and cars were improving, consumers remained sceptical."

There is not so much time left for business to rise to this eco-design challenge. In climate change terms the next ten years are critical for Britain and the rest of the planet.

Yet, in spite of this, the media have recently been full of warnings by many, including our Chief Scientist, Sir John Beddington, that we are unlikely to reach any comprehensive agreement during the latest climate talks in Cancun, Mexico.

This follows the failure to reach agreement in Copenhagen last year. Sir John's uncertainty also extends to any positive outcome for next year's talks in South Africa.

Despite failure at Copenhagen to reach a comprehensively binding agreement, 140 countries had made pledges in the 'Copenhagen Accord', with developed countries aiming for cuts in CO2 emissions and developing countries aiming for lower increases.

Sir John thinks it would be 'unwise' to work on the basis that the UN will achieve its target of limiting global temperature rises to a maximum of 2 degrees Celsius (C). He suggests we need to prepare for 'rapidly warming temperatures over the rest of this century'.

His views are echoed by experts I meet in universities across the region with some now seeing a 4 degree C temperature increase as a quite possible outcome. A new paper published today in Philosophical Transactions of the Royal Society , timed to coincide with talks in Cancun, argues that even with current promises to cut emissions, a rise of 4 degrees C is possible, happening as quickly as 2060 in a worst case scenario.

This could lead to droughts, desertification, extreme water shortages, especially in drier places such as southern Europe and northern Africa, leading to possible large scale loss of rainforests in South and Central America and parts of Africa.

"There is now little to no chance of maintaining the rise in global surface temperature at below 2C, despite repeated high level statements to the contrary," Kevin Anderson, University of Manchester was reported as saying in yesterday's Guardian (29/11/10). "Moreover, the impacts associated with 2C have been revised upwards so that 2C now represents the threshold [of] extremely dangerous climate change."

"2010 represents a political tipping point," Anderson said, "this paper is not intended as a message of futility, but rather a bare and perhaps brutal assessment of where our 'rose-tinted' and well-intentioned approach to climate change has brought us. Real hope and opportunity, if it is to arise at all, will do so from a raw and dispassionate assessment of the scale of the challenge faced by the global community."

Dr Peter Rayson, Associate Dean Faculty of Technology, Engineering and the Environment, Birmingham City University says, "The UK's Natural Environment Research Council's (NERC) programme, Quantifying and Understanding the Earth System (QUEST), has been working to throw some light on these issues, making its final report in early November.

"The QUEST programme has been operating since 2004. It involves 300 scientists investigating land use, bio-energy, forestry and mitigation; fish stocks, crops and food security; bio-geochemical feedbacks; carbon cycle feedbacks, rules of fire and large and rapid climate change.

"The key learning from establishing this Earth System Model is the interdependency of these issues and the fundamental impact that human economic activity and population growth has on our future Sustainability. From the final QUEST report it was apparent that the view was we are heading for 4 degree C plus outcome, probably 6 degrees C by the end of the century.

If you have access to Google Earth 5 you can load the QUEST scenario's for a 4 deg temperature rise http://www.fco.gov.uk/google-earth-4degrees.kml"

Richard Lambert suggested that in spite of these warnings for rapid temperature increases, "the needle on the dial for consumer behaviour has scarcely shifted." Apparently climate change was ranked 21st out of a list of 21 consumer concerns in recent US research by the Pew Research Centre.

"The CBI is working alongside Ipsos MORI and others to get a grip on what is required here," said Richard. "Already it's clear that by increasing the knowledge about the energy efficiency of a product or service, and explaining this in a coherent fashion, consumers will behave accordingly."

The CBI Director General cited the economic turmoil as a reason for this, adding that the public's trust in climate change had been damaged by manipulations of data resulting in a feeling of 'greenwash', especially following the email leaks from the Climate Research Unit at the University of East Anglia and the mistakes admitted by the UN's Intergovernmental Panel on Climate Change in asserting that Himalayan glaciers could disappear by 2035.

Vested interests in the USA (using around ¼ of world oil supply) made radical breakthroughs unlikely even though business was keen to invest and saw the potential for this area to drive recovery.

"What was once a niche topic for members had become central to the CBI," said Richard. "There is a need to become 'green to grow' with increasing evidence that recalibrating businesses to 'green' can provide benefits to business," quoting the M&S Plan A, P&G, Ford, Nissan, Mitsubishi, Siemens, GE, Clipper Windpower and Tesco, saving £0.5bn a year from energy efficiency strategies, as leaders of this approach.

However Richard Lambert told the Climate Change Summit that the CBI Climate Change Tracker was still showing more red than green. It had been set up by the CBI following the introduction of the Climate Change Act in 2008 to chart the government's progress in developing the policy framework and conditions to encourage the delivery of a sustainable economy focussing on the key areas of power generation, buildings, transport and industry.

"Companies don't have to wait for political leadership when they set about designing new products, or launching new services for the low carbon world," said the CBI Director General. But they did need some policy clarity - and consistency....For example on feed-in tariffs, green taxes, carbon pricing, the Green Investment Bank.

On Green Deal loans to homes to pay for energy efficiency measures he added that it was, "a nice idea in theory, but fraught with uncertainty about the appropriate scale of the scheme, about who is going to pay for it, and about how much demand there will be from homeowners in the first place."

However, despite the lack of clarity, lack of customer engagement to-date, and insufficient use of design to ignite consumer desire, the EU outlook, as articulated by Danish Politician and former EU Commissioner for Climate Action, Connie Hedegaard, was for strong growth in sustainable jobs from 1.6m in 2005 to 3.5m in 2020, with global market values either doubling or tripling during that period.

Gavin Patterson, Chief Executive of BT Retail echoed Richard Lambert's concerns about the need to drive the market stating that the consumer space was still to be seized and solving consumer pull was critical to driving forward sustainable solutions.

Minister for Energy and Climate Change, Chris Huhne, stated that the "shifting landscape of public opinion" was itself a challenge, "Threatening to undermine the collective will for action".
Apparently 7 out of 10 people already thought it was too late to do anything on Climate Change and 1 in 4 that Britain couldn't act alone. His fear was that fatalism could take hold and that uncertainty was not an excuse for inaction.

"We have the 3rd largest insurance sector in the world in the UK, managing assets valued around ¼ of the UK's net worth," said the Minister. Companies in this sector were being exposed to the cost of UK floods which soared to over £3bn in 2007 hitting premium costs.

"According to the ABI, if global temperatures were to rise by 2 degrees, average annual insured losses from inland flooding would rise by 6%. And the losses from an extreme weather event would rise by 18%," said Chris Huhne adding that it was estimated the sustainable home insurance markets would reach £4Tr in value by 2015.

On the CRC (Carbon Reduction Commitment) Energy Efficiency Scheme the government outlined its objective to make things simpler and easier for business, having published consultations on delaying the start of the CRC scheme by a year, in an effort to reduce the administrative burden on business.

They were intending to exempt more than 12,000 information declarers from the scheme. However the Minister was under no illusion regarding businesses' disappointment at the withdrawal of the commitment for revenues raised from the scheme being recycled to participants. Government were anticipating raising £1bn from the sale of CRC allowances by 2014/15.

The Green Deal was seen as the answer to bringing ageing housing stock up to today's standards through a nationwide refit. It was also being designed to apply to business allowing businesses to pay for energy efficiency improvements through a charge on their energy bill with the level of expected energy saving being higher than the cost of repayment.

It was anticipated the insulation industry could quadruple in size. "Britain accounts for just £112 billion of the global trade in low-carbon and environmental goods and services. We can do so much more," concluded the Minister.

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