Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/551405
UTILITY WEEK | 7TH - 13TH AUGUST 2015 | 9 Interview T he words "fear" and "trepidation" are not ones you'd expect a green lobbyist to use in association with the forthcoming climate change conference in Paris at the end of this year. Nonetheless, these are exactly the words Juliet Dav- enport, chief executive of Good Energy, uses when Utility Week asks about her expectations of the talks that aim to achieve a legally binding, global commitment to tackle climate change for the first time. Davenport was sensitised to the challenges posed by climate change long before the issue attained main- stream credibility, having studied first atmospheric physics and then environmental economics at univer- sity. She went on to work for the European Commission, contributing to early structures for carbon taxation and environmental policy, but became frustrated by the lack of political will to effect real change in the direction of economic decarbonisation – especially in the UK. Determined to demonstrate the potential of renew- able energy to decarbonise a fossil-fuel powered society, Davenport established Unite in 1999 – in 2003 it became Good Energy, one of the first independent energy suppli- ers to appear in the newly privatised electricity market and still the only one to offer customers 100 per cent renewable electricity. Sipping coffee in an in-demand meeting room at Good Energy's Chippenham head office – space is at a pre- mium following a recent recruitment burst – Davenport explains her less than enthusiastic anticipation of the UN Climate Change Conference: "I went to Bonn years and years ago and it was the most utterly, utterly chaotic thing I have ever been to. I can't think of anywhere worse to be than in that negotiation" – one which for all the promising rhetoric, is unlikely to lead to an agreement that will keep global warming within the magic "two degree" window for global warming, she adds. More broadly, however, Davenport is optimistic about changing industrial attitudes to decarbonisation, which seem to be picking up international momentum, independent of political wrangling. She finds Eon's decision to split its business, for example, "very interesting" and a potential blueprint for other large firms to undertake the difficult process of writing off carbon-intensive assets in order to face up to a new collective realisation that it is time "to do something about climate change". Setting out the size of that challenge in business terms, Davenport references the findings of the "Do the Math" campaign in the US. "If we want to keep within two degrees, they worked out that you can put 260 more gigatonnes of carbon into the atmosphere – that's the hard limit. The key issue is that if you look at the global market there is about 2,700 gigatonnes listed. "That means if you want to stay within two degrees, we're going to have to write off a lot of balance sheets and that is a reality. It's an incredibly hard reality to work out. Who will start to move first and how do you work out what to do with an asset that no longer has a value? That's where a lot of the energy companies get stuck." Recent and widespread announcements that institu- tions of all kinds are committed to rapidly divesting their carbon-intensive investments will, however, "make it a lot easier" to write off those assets, says Davenport – and put companies like hers in a favourable position. "That money will have to find somewhere else to invest and the people who don't have so much carbon on their balance sheets will suddenly be worth a lot more," she reasons. It's an optimistic outlook, but surely one that is undermined by recent announcements back in the microcosm of the UK that have seen subsidies for renewable energy slashed? Again, Davenport is surprisingly dispassionate in her response. Other renewables advocates have expressed outrage at moves to "stop the spread of onshore wind" and remove renewables exemptions under the Climate Change Levy, but Davenport says: "Were we shocked? No. We took a long look at all the renewable subsidies in this marketplace about five years ago. "We looked at the non-fossil fuel obligation, the Lecs, Rocs, the FIT CfD and the FIT – it's quite complex in terms of the different mechanisms, they're not conflicting but I think they could be seen to be competing. "And, from our point of view, renewables should be looking to a future where there isn't any subsidy – we should be calling that there aren't any subsidies for other fuels as well – that's the world we should be looking to. If I could move there tomorrow I would, because I don't want subsidies." Turning from aspiration to practical impact, Davenport admits that chancellor George Osborne's decision to remove renewables exemptions to the Climate Change Levy will hit revenues on the generation side of