Utility Week

Utility Week 25th October

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Finance & Investment Investor view Ian Temperton Tomorrow's value rating 2013: Top performing utilities companies 100% 82% 82% 71% 75% 69% 67% RWE KEPCO Centrica 50% 67% Average 66% 25% "Perhaps to get CCS funded and working we should be looking further up the energy chain to the fossil fuel supplier" 0% Eon Iberdrola backing. To achieve public acceptance, there will need to be far greater transparency of finances across the divisions of multinational companies. Consumers must be informed of where additional costs are going. In the coming decades energy utilities will have to engage with consumers differently on this issue. As the Tomorrow's Value Rating indicates, energy companies have yet to give a clear picture of what the future will look like for a consumer. But they can expect to be under increasing pressure to be more transparent in terms of revenues, and their expectations of future pricing and investment. The experience of the extractives industry suggests it makes sense to address the issue head on, and to work in partnership to develop a disclosure framework that meets the needs of all those involved. It is also clear that the EITI's voluntary approach to transparency established the benchmark – but now it is no longer an ambition, it is increasingly an expectation that is backed up by legislation. Jonathan Sykes is a consultant at DNV Two Tomorrows The full energy utilities report, results and findings of the main TVR 2013 and of the other TVR sector studies, as well as details of the TVR methodology, are available at www. twotomorrows.com/tomorrows-value-rating Enel I THE STORY BY NUMBERS Tomorrow's world The Tomorrow's Value Rating (TVR) assesses the sustainability criteria of 50 companies across five sectors in the Dow Jones Sustainability Index 66% The sector TVR score for utilities, against an index-wide average of 63% 82% Top performers Eon and Iberdrola's score in the TVR index Tomorrow's value rating 2013: leaders 100% 91% 89% 87% 84% 84% 82% 82% 80% 80% 80% 75% Average 65% 50% 25% Deutsche Telekom Ford BMW Eon Iberdrola Vodafone Sprint Nestle KT Unilever 0% t will have escaped no-one's notice in the utility business that despite huge investments in clean energy and tough emissions reduction targets, Europe is still burning coal without having the technology to deal with the emissions. Thus far the obligation to deal with the pollutants emitted has been concentrated on those who emit, the power companies. Yet none of them has yet developed a full-scale carbon capture and storage (CCS) facility because none of them can work out how to pay for it – and make it pay. Perhaps we are looking at the wrong target to get CCS funded and working and should be looking further up the energy chain to the fossil fuel supplier. The idea is simple. If you supply fossil fuels to Europe, then you would need to also deliver a certain proportion of certificates which prove you have permanently stored CO2 equivalent to a certain proportion of the emissions to "The atmosphere that fossil fuel your fossil fuel will companies create. Changing the have the focus of the obligakind of cash tion to fossil fuel needed to suppliers has three fund CCS" advantages. First, the fossil fuel companies have the kind of billions needed to fund CCS and they are international. Second, they understand the risky bit because it is they who have drilled for gas and oil and emptied the fields in the first place. Third, they have more experience in delivering largescale multi-disciplinary projects. And there is a fourth reason. If it is their obligation and they find a more efficient and effective means of reducing emissions, then they are welcome to do so. So they may get round to weaning their shareholders, and us, off oil and gas. Let's be clear, we would all prefer not to keep inventing new forms of support, particularly, as we know all too well, after immense effort you might not end up with what you needed, and even if you do, it might not work. However, everyone in the climate change community knows we need an answer to emissions from hydrocarbon combustion at large point sources if we are to stand any chance of averting dangerous climate change. Ian Temperton, head of advisory, Climate Change Capital UTILITY WEEK | 25th - 31st October 2013 | 21

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