Silas Birtwistle, the artist behind A Table from the Sea's Edge explains the background to his global project.
A few years ago, I set about finding ways to make a poetic idea of mine into a reality. The concept, was to travel to four biodiversity hotspots around the world in search of driftwood that I would eventually use to make a large conference table, surrounded by twelve chairs. At each geography, I worked alongside local communities and an environmental NGO. The finished piece therefore, is an attempt to unify the plights and issues these places face, and demonstrate that global biodiversity is inextricably linked. The driftwood table is symbolic of the link between land and sea, but a practical piece designed to be used for discussion and debate.
The sculpture was unveiled during the International Year of Biodiversity at the tenth meeting of at the Conference of the Parties to the Convention on Biological Diversity (COP-10) which took place in Nagoya, Japan in October, 2010. It provided a platform for high-level UN debates on environmental issues, and ceremonial signings of agreements.
Since Nagoya, it has been exhibited and used at a number of venues, including The Annual Meeting of The World Economic Forum, Davos, and The World Museum, Liverpool.
I am delighted that the journey still continues. Now, the table is being hosted by PwC’s London office for a series of environmental talks over the coming months. I hope the table will continue to serve as a platform for debate, bringing together business and other groups to shed a light on the plight of the worlds’ rich and varied biodiversity.
Silas together with Malcolm Preston, Global Head of Sustainability and Climate Change
In what's becoming a familiar headline for the renewables industry across Europe, the UK government have taken another step in reform of Feed in Tariffs. Daniel Guttmann, a specialist in the topic examines the implications of the latest update for the UK.
Overall, the announcement is somewhat of a mixed bag for the industry. It's positive news that the proposals are beginning to get more detailed, it will allow the industry to at least shrug off some of the uncertainties that have persisted since the previous announcements, and the subsequent court challenge by the UK government.
The overall spending envelope was extended and government is now hoping to deploy more solar than previously envisaged. That's good news for an industry that has to increase efficiency and volume in the face of the current (and future) reductions in FiTs. The emergence of discussion around the shortening of the FiT period is concerning, as well as whether the FiT should remain index linked. These two issues, if applied will make solar yet less attractive and this discussion has the potential to add yet more uncertainty which this industry really could do without.
The proposed 50% cut to roof top tariffs remains and this seems unlikely to change. While the reduction is steep, it only applies from March, so provides a window of opportunity for high activity levels over the next few weeks, perhaps similar to the extremely high levels of installations in late November/early December 2011. It shows what the industry is able to accomplish when demand rises. Given the inevitability of the cut, much of the industry will have begun to take action to adapt to the new regime.
The government has listened to concerns around the energy efficiency rating provision and has loosened the requirement for buildings with an Energy Performance Certification rating of at least D, the highest performing being A. While it curtails the market, it is better than the original C rating. As and when the UK's Green Deal to incentivise domestic energy efficiency measures kicks in properly - in my view around mid-2013 - these low efficiency rating will also move back onto the radar of the solar industry.
We have long argued for a clear timetable and logical mechanism to tariffs, as in Germany for example and the government is now putting that approach into practice. I think the devil is in the detail in this package and while this gives on the whole more visibility to the industry, there are elements which will be worrying.
The proposed mechanism post - July 2012 consists of a likely automatic degression, or reduction, and an accelerated adjustment based on deployment levels. So if deployments exceed anticipated levels, the government could reduce further the FiT rate.
Given the current uncertainties around costs, it feels like a 6-monthly 10% reduction on tariffs risk creating a severe stop/start market and I think that a lower base rate should be considered. The deployment adjustment is sensible, but it requires clear communication of the government's envisaged annual deployment levels. Also, given the very different dynamics of the different bands, this needs to be considered separately for domestic, commercial and stand-alone systems.
The emergence of discussion around the shortening of the FiT period is concerning, as well as whether the FiT should remain index linked. These two issues, if applied will make solar yet less attractive and this discussion has the potential to add yet more uncertainty which this industry really could do without. It took the UK ten years to install 32MW to the end of 2009, yet UK solar PV capacity grew six fold between April 2010 and August 2011 to over 220MW. The number of qualified solar PV installers is the UK is five times the level it was two years ago. While the UK solar PV market is unlikely to achieve the level of growth that many had forecast, the Government's target of 2.68GW of solar PV installed by 2020 still remains achievable.
Paul Nillesen, partner, PwC renewables based in Amsterdam, reflects on renewables 'coming of age' year for M&As
In just 12 months, the value of merger and acquisition deals across the renewables sector globally has risen 40%. Deal values hit US$53.5bn despite the backdrop of global economic instability, with billion dollar deals dominating and new technologies - Solar, wind and energy efficiency - overtaking hydropower as the driver for big deal values for the first time. One in every three deals last year was solar and overall deal value for the sector is up 56% from US$10.2bn to US$15.8bn.
Sustained deal numbers, and record values are showing how the sector is maturing. Falling solar prices are making solar power more economic and closer to grid parity in some markets. The entrance of pension and insurance funds, most notably via the $1.3bn investment by Danish pension insurance groups in offshore wind in Denmark, confirms the trend towards a maturing market and the creation of secondary markets, with assets sold for a second or third time.
A reappraisal of the role of nuclear in many countries’ national energy strategies after the Fukushima emergency has provided an extra impulse for renewable generation in certain markets. There was also continued strong momentum behind deal activity in the solar and energy efficiency sectors. Buoyed by the increase in big transactions, deal value in these two sectors nearly doubled year on year. Together, they account for the vast majority (79%) of the US$15.3bn increase in the total value of all renewables deals.
So for the year ahead will the sector continue to buck the uncertainty trend? There is a note of caution in our analysis. The sector is facing considerable growing pains. US and European manufacturers are coming under cost pressures, and they are not alone. Some Chinese manufacturers also face heavy debt and are coming under competitive strain with significant overcapacity in the country. The result is likely to be a succession of tie-ups within and between the main manufacturing territories of the US, Germany and China leading to a smaller number of big global players. Rolling uncertainty on the eurozone crisis will make the deal environment much more difficult and a deeper crisis would undoubtedly dampen deal flow further, but will it block the big deals? Staying out of the markets in the hope things will improve cannot be assumed to be the right strategy. The potential for further destabilisation domestically, or at an inter-governmental level cannot be ruled out, but if a deal is highly strategic, and mission critical, then parties will still feel it is worth doing on the right terms.
Daniel Guttmann, PwC Renewables and Clean tech, examines where we go from here after the UK Court of Appeal's decision on Feed in Tariffs
The unsuccessful challenge by the UK government to the Court of Appeal on the judgement that their proposed changes to the Feed in Tariff scheme were unlawful was, like the original judgement, a temporary respite for the solar industry. It was facing severe difficulties given the speed and the depth of the proposed FiT cut put forward by the Government. The industry has long accepted that FiTs will and should come down, but was taken aback by the quick turnaround and the fact that the new tariffs were supposed to come into force before the end of the consultation. The latter was a tactical shot in the foot for the government.
The fundamental problem has not gone away and installations between October and the December deadline have gone through the roof, if you excuse the pun. In the UK we now have between 800 and 1000 MW installed capacity; far beyond what was ever planned. The government is now unlikely to be able to contain spending within the original envelope set for funding the tariffs, and will have to extend it.
We have long argued that a regular review of FiTs within a well coordinated, well communicated and adhered to timetable is necessary. Additionally, a corridor for installed capacity with a clear associated FiT adjustment mechanism, like in Germany needs to be considered.
In the UK, as in many other European states over the past twelve months, Feed in Tariffs have to, and will come down, it's a question of how the industry will respond.
There are sporadic reports of installers lowering prices of panels far enough to make returns attractive for consumers, so there is still room for manoeuvre. What's needed now is a similar room for constructive conversations between industry and Government on this.
Read PwC's analysis of the Feed In Tariff market released Autumn 2011:
We leave Durban with agriculture issues back in the negotiating text. It’s not quite the agreed climate and agriculture work program on adaptation and on mitigation that many, including President Zuma, were hoping for. Rather, we have a process to make recommendations on a process.
Agriculture is the backbone of Africa, and the largest sector of the economy by GDP, number of employees and exports. So-called ‘climate smart agriculture’ practices can bring food security, adaptation and mitigation benefits, yet finance and technological support is lacking to transform agricultural systems.
A lack of recognition of agriculture in the climate negotiations hasn’t helped so far, with the issue missing from the climate text before Durban. African countries have really galvanised in order to make progress at the summit this year. It's a good start.
Celine Herweijer, director, PwC sustainability and climate change examines what progress was made on the Green Climate Fund in Durban.
Durban will be remembered as the birthplace of the Green Climate Fund and it’s a critical outcome, particularly for developing countries.
The fund is one of the major distribution channels for the US$100Bn/yr by 2020 that has been pledged. Initial contributions to the setting up the fund were made, and design and governance arrangements were agreed. There will be a balanced allocation of funding between adaptation and mitigation, and a dedicated private sector facility that can directly and indirectly finance private sector adaptation and mitigation activities. A GCF Board will meet for the first time in April 2012.
The developments in Durban provides a structure for funding to become more ambitious, coherent, effective, transparent and accountable, all of which will be critical during a period of increasing aid austerity. It will help to mobilise new sources of funding including from private sources, and to ensure we spend wisely and can demonstrate real results with the money we have.
Getting this right and doing so quickly is so important, as much of the transformation we will need to limit future growth in greenhouse gas emissions must happen in developing countries, and as these are the areas on the front-line of climate impacts.
In 2012 we will also have to really turn our focus and will onto capitalising this fund, so that it is more than an empty shell. We’ll need to get early progress on new sources of finance for climate change. US$100Bn/yr is no mean feat, especially in the trying economic climate we are in today.
Jonathan Grant, PwC sustainability and climate change:
What we’ve got is a clear signal that may be another clear signal in 2015. So Durban was more of a victory for the UN process, than for the global climate. Look at the targets and follow the money. There is no more ambition here than what we saw in Cancun or even Copenhagen. Overall, business will shrug its shoulders over Durban and wait for direction from national capitals.
There are no surprises about which countries signed up to targets under a second Kyoto period, or what those targets are. So for Carbon Markets, we don't expect much movement following Durban. In fact, in many ways what happened in Brussels last week, is more important than what happened in Durban.
Thanks to Durban, the CDM will live to see another day, but demand for credits for these projects is lacklustre. A lot of developers and traders have been scaling back activities over the last year, so this is good news for London. But carbon markets are expected to stay in the doldrums, because of oversupply in the EU Allowance market as a result of the recession.
PwC’s sustainability and climate change team give us their round up on the key issues, their implications and next steps from The Durban Platform for Enhanced Action.
Richard Gledhill, partner, PwC sustainability and climate change
So now we have a road map and an ambitious timetable. But our precise destination remains unclear. Even the length of the second commitment period under the Kyoto Protocol was parked. Many countries had wanted five years to 2017, but this would be inconvenient for the EU, with its 20% reduction target by 2020.
There is still a 40% gap between the 2 degrees climate goal and emissions targets through to 2020. Reaching 2 degrees will require a revolution in how we produce and use energy.
The COP has made good progress towards operationalising the Green Climate Fund and a number of donors have pledged start up funds. But there was little progress on the real issues – where will the money come from and where and how will it be spent. It is difficult to see Western donors writing big new cheques in the current financial crisis.
Looking ahead, it will be critical to link the existing landscape of bilateral and multilateral initiatives, such as those in the UK and Norway, with the new Green Climate Fund, to ensure we make life simpler for developing countries, and ensure aid effectiveness.
During the summit, the private sector had been concerned about the negative attitude of some countries to markets and private finance, and lobbying by NGOs in the first week raised the pressure on these issues. But after three long nights of negotiating, the Durban texts leave the door open for private finance and new market based approaches.
If we are really going to un-lock private finance and capabilities to help tackle the climate challenge, we need the private sector involved at the heart of designing these mechanisms – feeding back on what works and what does not.
Looking at REDD+; avoided deforestation is a critical issue for the global climate and a key economic issue for many developing nations. The private sector has been working hard to help progress the REDD+ negotiations. The Durban Platform will provide a boost to emerging private sector activity in REDD+ - results based finance can come from both public and private sources, subject to necessary environmental and social safeguards. But private funding is constrained by the small scale of the voluntary carbon market and the ineligibility of REDD credits in the EU. Public money needs to be used here to pump prime markets and to scale up private sector involvement.
Overall, we leave Durban, to move to a crucial next stage of the negotiations. To get an agreed outcome with legal force by 2015, the key players will be China, the EU, India and the US. After being sidelined at Copenhagen, Europe is now back in the driving seat on the climate agenda - its roadmap was the key to the deal in Durban, and its funding commitments are starting to deliver results in the developing world.
Richard Gledhill of PwC's climate change team, at the UN climate summit in Durban, looks ahead to the (second) final day of negotiations...
The mood at the International Convention Centre has changed from eager anticipation to languid pessimism.
Delegates have absorbed the texts issued overnight and are now drifting around the ICC, waiting for news. There are rumours of a new Ministerial Indaba and possibly of a plenary starting at 4pm. Though quite how long the UNFCCC has booked the ICC for isn't clear. In the end it may be logistics, rather than politics, that scuppers the COP.
There seem to be three possible outcomes:
The best (or, at this stage, least worst) outcome would be the agreement of the 'bigger picture' text issued at 23.00hrs last night - a protocol or other legal instrument applicable to all parties by 2015 - backed up with warm words about increased ambition.
Essentially this is the roadmap option being pushed at the start of the COP by the EU. Though some of the clarity and detail they had hoped for has been lost. Like some sat nav devices, it isn't entirely clear where this road map will takes us, or even that the route will be passable.
Meanwhile the Kyoto Protocol would be extended through to 2017, though possibly only with new targets for Europe, the Green Climate Fund would go ahead, as would the Adaptation Committee, the Technology Centre etc. In other words, lots of machinery and process, but not yet the necessary scaling of emission reductions and finance.
At the other extreme, failure to agree and collapse of the process. Though no one wants to be the one that brings down the UNFCCC.
More likely perhaps is the third outcome - unfinished business. Time, rather than patience, runs out and the COP is suspended, to be re-opened early in the new year (one delegate even suggested hijacking Rio).
The only small positive from the delay is that Jonathan Grant has had plenty of time to practice his intervention on behalf of the international business community. I just hope he gets chance to make it.
Earlier today, one of my other coleagues saw Christiana Figueres in a cash point queue at the ICC in Durban this morning. As she got to the front of the line the machine ran out of cash. Let's hope that not a precursor of things to come on the Green Climate Fund.
Keep up to date with our comments on the developments in Durban over the weekend.
Richard Gledhill comments on the final day of negotiations
Could the UN process be heading towards a successful outcome in Durban? Albeit on a rather slow burn.
Sources have suggested that there is a real possibility of a 'Durban mandate' that will extend the Kyoto Protocol, commit countries to signing a new, legally binding global deal by 2015 and require all major economies to take on binding targets from 2020.
The COP is also making progress towards operationalising the Green Climate Fund and many of the other structures and processes agreed in Cancun.
Ministers and negotiators worked late into Thursday night, grappling with options and issues, and there is frenzied activity today behind closed doors. Much of the continuing negotiations centres on the role of markets and the private sector, which are so important to business.
Some text has emerged but the timetable for tonight looks very uncertain. PwC's Jonathan Grant has been asked to represent the international business community in the final plenary, though quite when he will get his minute of fame is anyone's guess.
Even if all this gets gavelled through, Durban will have been more of a victory for the UN process, than for the global climate. Looking at the numbers, there is no more ambition here than we saw in Cancun or even Copenhagen - there is still a 40% gap between the 2 degrees climate goal and emissions targets through to 2020.
The Green Climate Fund has been given funds to get up and running, but not yet for developing countries. Instead, major donors such as Norway and the UK have been showcasing bilateral investments and tangible successes in partner nations in the developing world.
Meanwhile the carbon markets remain in the doldrums, overshadowed by low growth and the financial crisis in Europe. So, whatever the outcome in Durban, the context for an early and rapid scaling of green investment still looks challenging.
Keep up to date with our comments on the developments in Durban over the weekend.:
