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Tom Szaky: How to repackage packaging

This is adapted from “The Future of Packaging: From Linear to Circular,”by Tom Szaky (Berrett-Koehler Publishers, 2019).

We Americans often toss packaging in the trash without much thought. As stated previously, even though we are only 4.4 percent of the world’s population, we produce 20 percent of the world’s garbage; much of it is packaging and printed paper (PPP). Proportionally, that’s a lot.

The Future of Packaging book coverEveryone who touches packaging has a role to play in ensuring that its value is captured and that it doesn’t add to the world’s pollution. But who should be first in line to take financial responsibility? Is it the producers who make it, the retailers who sell it, or the cities where all of this takes place? Or is it, perhaps, the consumers who choose to buy it?

Despite the global fragmentation of laws and waste management systems, government has a major role in changing consumer and industry behavior when it comes to wasteful packaging. We see that especially when encouraged through a mode we all understand: money — in the form of fines, penalties and incentives. When such levers are put into place, people improve their behavior quickly and dramatically.

Businesses are subject to vast amounts of government regulation in the interest of protecting consumers and ensuring a level playing field. Among other things, laws today require that labels and packages provide more facts about the contents inside and aim to preserve our health. In the world of consumer packaged goods, we see this with certified-organic and organic-transitional labeling, specific ingredient bans, fair-trade sourcing conditions and acceptable levels of certain chemicals in products and packaging.

But can you think of any laws regulating the end of life of the packaging itself? Many such laws exist around the world, especially in developed countries. In the United States, some mandatory recycling laws exist at the state and local levels, but federally there are none.

Challenges to recycling laws

Business brings tax revenue and jobs to cities, states and countries, so business interests often drive government regulations. But there are regulations that businesses don’t like, mainly those that cost money and reduce the ability to maximize profits. For most businesses and entrepreneurs, regulations are often viewed as financial and legal barriers to growth, and corporations see it as an obstruction to their desire to maximize return for their shareholders.

While their member companies finance recycling and resource management systems throughout the world, trade associations such as the American Institute for Packaging and the Environment and the Grocery Manufacturers Association have opposed legislation in the United States under the philosophy that packaging disposal, recycling and litter cleanup costs should be the responsibility of government.

Thus recycling laws get left to the states in the form of bottle bills; the banning of Styrofoam containers, plastic bags and drinking straws; and guidelines for the disposal of e-waste, paint and pharmaceuticals. This means the make-use-dispose linear economy pipeline currently employed around the world becomes only more and more pronounced and entrenched as time goes on. Year after year manufacturers create new products at a fraction of the cost of their predecessors, so more people now own more and more things —things that have a shorter and shorter useful life.

Policies like bottle bills tend to get pushback from industry. Although bottle bills provide consistent, high-quality recycled material, industry often argues that such regulations are cumbersome, expensive and a logistical nightmare. As a result, they end up not being passed; in the end governments can regulate only to the point that society is willing to bear.

Even with broad availability of recycling programs in much of the United States, the recycling rate for PPP — including traditional curbside recyclables such as aluminum, glass, plastic, paperboard, newspapers, phone books and office paper — has been stagnant for the past decade.

Extended producer responsibility

One solution may be to shift the responsibility from taxpayers and governments to product manufacturers, as they have the distinct ability to choose what package forms they use for their products. With this in mind, should they be the primary responsible party to pay for the proper end-of-life management of their products and packages, even if this cost finds its way to the consumer in the end?

Extended producer responsibility (EPR) is the policy concept that extends a manufacturer’s responsibility for reducing upstream product and packaging impacts to the downstream stage, when consumers are done with them. There are more than 110 EPR laws currently in place for over 13 product categories in more than 30 U.S. states. The United States, however, is currently one of only three nations of the 35-member Organization for Economic Co-operation and Development that does not have an EPR system specifically for packaging in place or under development.

EPR packaging laws have been in place for up to 30 years in 11 countries in Asia, South America and Africa, as well as in Australia, 34 European nations and five Canadian provinces. While not all EPR programs are alike, the best ones are not voluntary in nature and produce recycling rates far higher than what we have experienced in the United States. British Columbia and Belgium, both of which have EPR packaging laws in place, have attained nearly 80 percent PPP recovery.

Voluntary industry-led programs, while laying a foundation for collection and recycling systems, rarely lead to systemic changes that significantly increase the quantity and value of the materials collected, and they do not provide a sustainable funding source across all producers in a certain category. For instance, although voluntary initiatives to collect plastic films at retail outlets have helped reduce contamination of plastic bags in the recycling stream, many U.S. municipalities deem this effort insufficient, resulting in a flurry of bag bans and fees seeking to significantly change consumer behavior and decrease the use of plastic shopping bags.

EPR laws that require brand owners to cover the cost of recycling post-consumer PPP provide an incentive to producers to reduce the amount of packaging they use, incorporate environmentally preferable materials into their packaging, and maximize material recovery and quality. In contrast to the fragmented municipal programs currently in place, well-designed EPR systems provide consistency by establishing statewide producer-funded programs that accept the same materials in all cities and towns and convey the same educational messaging.

Such policies also help meet the supply needs of industry. Today many brand owners that pledge to incorporate recycled content into their products often cannot procure enough recycled material to meet their needs. With strong EPR laws, producers stand to gain access to greater amounts of post-consumer recycled material. These programs also offer financial incentives that encourage manufacturers to design their packaging to be more recyclable.

EPR packaging laws are spreading globally and growing in viability partly because the recycling or disposal cost is typically paid by manufacturers and their consumers, not taxpayers and government agencies, freeing up millions of dollars for other municipal services. In addition, these programs provide a direct financial incentive for manufacturers to use materials that are less expensive to recycle, increasing their value and opportunity to be brought back into the circular economy.

EPR packaging systems are continually evolving. The most innovative are those that charge a fee to manufacturers for each packaging material type based on its cost to recycle or dispose of. One such system charges manufacturers less for producing glass than plastics, as well as less for PET and HDPE containers, compared with films, polystyrene and other plastics that are not easily recycled. This closed-loop recycling system provides a direct financial incentive for manufacturers to choose environmentally preferable (often more highly recyclable) materials in their packaging.

To be clear, all of this extra cost does directly end up in the price of the product a consumer pays in the end. But perhaps this cost is better incurred at checkout than in negative externalities — like greenhouse gas emissions, marine debris, resource scarcity, toxicity, and food and drinking-water pollution — and continuing the burden on municipalities and taxpayers to subsidize waste.


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Global briefing: Audi and E.ON to deliver Europe’s largest solar rooftop

From Ecuador’s electric buses to Balearic climate laws, BusinessGreen rounds up all the green business news from the world this week

Audi and E.ON team up to deliver Europe’s largest solar rooftop

An Audi factory in Hungary could soon be home to Europe’s largest solar rooftop installation thanks to a new partnership between the auto giant and energy supplier E.ON. The companies are set to build a ‘solar energy park’ on the roofs of the two logistics centresin Győr covering about 160,000 square metres. The installation will have a peak output of 12MW. Construction work is scheduled to start in August 2019 with renewable energy generation beginning at the start of next year.

“We are committed to the economical use of resources and therefore want to keep the environmental impact of our production as low as possible,” said says Achim Heinfling, chairman of the board of management of Audi Hungaria. “Approximately 70 per cent of Audi Hungaria’s heat requirements are already covered by climate-neutral, geothermal energy. Our goal is to have completely CO2-neutral plant operation in the future. With the construction of the solar-cell park, we are now taking a further step to achieve this in terms of power supply.”

BYD ships 50,000th electric bus

Chinese electric vehicl giant BYD has reportedly shipped its 50,000th pure electric bus, as global demand for zero emissions buses continues to accelerate.

The company said it now has clientele in 300 cities around the world, with the delivery of its latest K9UB pure electric bus to the Spanish city of Badajoz later this Spring.

The milestone comes in the same week as Ecuadorian Vice President, Otto Sonnenholzner, traveled to the port of Manta to welcome the first 20 BYD electric buses to the South American country. The buses are to operate in the city of Guayaquil.

Sarajevo joins Green Cities initiative

Sarajevo has become the latest city to join the European Bank for Reconstruction and Development’s (EBRD) Green Cities programme, with the launch of a dedicated environmental action plan.

Under the plan, the Sarajevo Canton will identify its environmental priorities and then develop a long-term 10 year vision backed by mid-term targets and short-term actions to improve the cities environmental performance.

Balearic Islands adopt sweeping new climate law 

They may be famous for partying, but Spain’s Balearic Islands just got serious about climate action. Just a year after it was first presented, the Balearic Climate Change and Energy Transition plan was passed into law this week, setting a 100 per cent renewable energy by 2050 target for the islands of Mallorca, Menorca, Ibiza, and Formentera.

The law coincides with confirmation of a new agreement to close Mallorca’s coal fired power station, which will see its operating hours curbed from 2020 ahead of complete closure in 2025. 

The legislation also bans the sale of diesel cars from 2025 and new petrol cars from 2035. 

LA switches from gas to renewables plan

Reuters reported on moves by Los Angeles Mayor Eric Garcetti this week to shelve plans to replace three gas power plants with new gas technologies and instead step up investment in renewables.

“This is the beginning of the end of natural gas in Los Angeles,” Garcetti said in a statement. “The climate crisis demands that we move more quickly to end dependence on fossil fuel, and that’s what today is all about.”

Pew Research Centre: Climate change seen as top global security threat

A poll covering 26 countries undertaken by the influential Pew Research Centre has revealed concern about climate change has risen sharply in recent years, making it the top security concern for the public in many countries.

Reuters reported that overall climate change was seen as the top security concern by respondents, followed by Islamist terrorism and cyber attacks. The polling echoes the results of the World Economic Forum’s recent survey of business leaders, which similarly identifed climate change and environmental factors as some of the top threats to the global economy.

Australian court blocks coal mine on climate grounds

An Australian court has issued a landmark ruling, rejecting an appeal against a planning decision for a proposed New South Wales coal mine on environmental grounds, including the potential climate change impact.

Justice Brian Preston upheld the origianl decision to refuse the Rocky Hill Coal Project a development application, citing “significant adverse impacts on the visual amenity and rural and scenic character of the valley, significant adverse social impacts on the community and particular demographic groups in the area, and significant impacts on the existing, approved and likely preferred uses of land in the vicinity of the mine”.

However, in what could prove a significant step he also ruled that the “the construction and operation of the mine, and the transportation and combustion of the coal from the mine, will result in the emission of greenhouse gases, which will contribute to climate change” and as such the costs of the project exceeded the projected benefits.

Writing in the Sydney Morning Herald, lawyers for the campaign group that opposed the mine hailed the decision as a major breakthrough. “When we first argued that our client, the Groundswell Gloucester, should be a party to this case and put a climate-change ground before the court, the mining companies thought it a laughable proposition, and said it would be “a sideshow’,” they wrote. “As it happens, climate change became the main event in this court, as it is elsewhere.

“The ramifications are likely to ripple out across Australia and possibly the world. This is climate litigation writ large.”

Dutch government floats plan for new EU aviation fuel tax

The Dutch government is set to call on the EU to introduce new aviation tax in support of the bloc’s climate goals. In a new position paper, the Dutch government argues that “to prevent galloping climate change, we need to be more ambitious”. As such it suggests the bloc should consider emulating those countries that already have an aviation tax in place and should look at how it could step up aviation levies across the bloc.

Source: – Business Green

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Episode 159: Director-investor disconnect, financing the circular economy transition

Week in Review

Tune in around 5:41 for a roundup of news.

  1. How Marsh and McLennan, Allianz and other insurers are responding to climate change risks
  2. Corporate directors downplay ESG issues, defying directors
  3. Built to last: The business case for living buildings in 2019

Featured Stories

Inside the job of a sustainability professional (19:05)

“We never really have the same day twice. Often, we’re exploring new opportunities to expand our use of sustainable fuel, low-carbon fuel that’s going to power our aircraft in the future, typically using a waste feedstock to power them.” And then, there’s the job of turning that “story” into a brand differentiator. Introducing the new “What I Do” series, with insights about how corporate sustainability professionals get the job done. This episode features Aaron Robinson, senior manager of environmental strategy and sustainability for United Airlines.

How to communicate sustainability as a competitive advantage (25:44)

While nearly half of U.S. companies are communicating with investors about sustainability, they are doing so in ways that reinforce the notion that environmental, social and governance strategies are “nice to have” rather than integral to decision-making. Forward-thinking companies are looking at ways to cast it as a competitive advantage. Insights from Kristen Lang, director of company network activities for nonprofit Ceres.

The circular economy and sustainable finance (33:17)

Nearly 62 percent of U.S. companies are planning to put a circular production in place or already support one. That’s one of the high-level findings of a report released earlier this month by ING, the Dutch-born financial services company. The research represents the views of executives in four sectors: automotive, consumer electronics and telecommunications, food and agriculture, and health care. And it demonstrates a huge shift in thinking over just the past year. We discuss the data with Anne van Riel, head of sustainable finance for the Americas region.

What’s new at GreenBiz?

News, events, webcasts — the list goes on. Keep your finger on the pulse of the latest in sustainability by keeping up with GreenBiz.

Do we have a newsletter for you! We produce five weekly newsletters: GreenBuzz by Executive Editor Joel Makower (Monday), Transport Weekly by Senior Writer and Analyst Katie Fehrenbacher (Tuesday), VERGE Weekly by Executive Director Shana Rappaport, Energy Weekly by Editorial Director Heather Clancy (Thursday) and Circular Weekly by Director and Senior Analyst Lauren Phipps  (Friday). You must subscribe to each newsletter in order to receive it. Please visit this page to choose the newsletters you want to receive.

Check out our Center Stage podcast, which features the best of live interviews on sustainable business and clean technology, conducted on stage at GreenBiz and VERGE conferences.

The GreenBiz Intelligence Panel is the survey body we poll regularly throughout the year on key trends and developments in sustainability. To become part of the panel, click here. Enrolling is free and should take two minutes.

Stay connected

To make sure you don’t miss the newest episodes of GreenBiz 350, subscribe on iTunes. Have a question or suggestion for a future segment? E-mail us at [email protected].


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Why solving the problem of plastic waste begins at home

Solving the plastic waste issue will require unprecedented levels of investment, novel partnerships and accelerated innovation — the kind that harness free-market forces and scalable solutions as powerful engines of growth. A circular economy for plastics demands new business models and innovation to truly transform consumer packaged goods from “consume and dispose” to “consume and collect.”

The Ellen MacArthur Foundation has called for three strategies to transform the global plastic packaging market:

  1. Fundamental redesign and innovation
  2. Reusable packages
  3. Recycling with radically improved economics and quality

To these, I would like to add a critical fourth strategy: the mobilization of consumers.

Below, I delve into each of these strategies and explore specific examples of how innovation, new business models and cross-value chain partnerships are hard at work. It’s essential that these examples and others are explored, tested, quantified and — if viable — scaled for rapid adoption.

Innovating plastic material: post-consumer polypropylene

The global polypropylene (PP) market is on track to reach $133.3 billion by 2023, according to Transparency Market research. But PP — used widely in a range of applications, from kitchenware to medical equipment — is one of the least-recycled plastics, at a rate below 1 percent for post-consumer recovery. Until now, the low volume, low quality and relatively high cost of recycled polypropylene have been barriers to its use, and it is usually down-cycled into utilitarian, low-value items.

A Procter and Gamble (P&G) scientist has invented a breakthrough technology that removes color, odor and contaminants from used polypropylene, readying it for restoration to ultra-pure recycled resin with no trade-offs. To drive scale, P&G licensed the technology to PureCycle Technologies, which is completing construction of its feedstock evaluation unit and plans to open a production plant in Ohio in 2020. This innovation represents potential for billions of pounds of high-quality recycled polypropylene to replace virgin materials for P&G and many other companies.

PureCycle has sold out all of this first plant’s production for the next 20 years. Imagine how much recycled polypropylene could be reused again and again if this technology is scaled up. Source: P&G

New business models for reusable packaging

Several promising pilots are underway to test the viability of reusable packages and the business models behind them that collect, refill and reuse containers.

Here’s an out-of-home example: Lisa Foster, sustainable packaging manager at Coca-Cola European Partners, recently described a pilot underway at the University of Reading in the United Kingdom, where they introduced Coca-Cola Freestyle machines. Staff and students can purchase a refillable bottle, microchipped to make it recognizable upon each use. The user can preload the bottle with credit to easily and conveniently refill it with drinks; the credit on the bottle ensures it will be reused. This has the potential to dramatically shift consumer habits, especially if industry can align on technology and incentives to operate across competing brands.

Imagine if the on-the-go refillable microchipped bottle schemes could be scaled across soda machines and brands, such that the consumer is rewarded for frequent re-use.

A refillable business model

Another pilot soon to get underway is Loop, an at-home reusable, refillable business model for consumer packaged goods (CPG) that kicked off during the 2019 World Economic Forum Meeting. TerraCycle is working with many of the world’s biggest companies, moving their supply chains — everything from shampoo to ice cream — from disposable to durable packaging.

Imagine if the world’s most popular consumer products could be ordered and delivered to your home, and when you’re finished using a product, its package is picked up, cleaned, replenished and returned to you.

Creating the marketplace

The creation of a high-functioning global market of recycled plastics is within reach but will require major cross-industry cooperation. Recycling rates and infrastructure vary significantly across countries, as do the various types of plastic materials and forms getting collected and reclaimed.

For decades, many CPG manufacturers have been using recycled PET (polyethylene terephthalate) and HDPE (high-density polyethylene) in their packaging, as most facilities efficiently can sort PET packages, recycle the material and sell it back as PCR (post-consumer recycled material) to make the economics work. But other materials, such as flexible-film plastic, are not widely collected for recycling in all countries.

The low weight of flexible packaging means a lot more packs need to be collected to meet current weight-based recycling targets, and many facilities lack the capability to sort and bale the material. Hence, the market for post-recycled flexible films is anemic.

Some of the most promising advances toward a step-change in the recyclability of flexible films are happening in Europe via a project called CEFLEX and in the United States with the Materials Recovery for the Future (MRFF) project. CEFLEX is a cross-industry group devoted to creating a sustainable business model for collecting, sorting and reprocessing post-consumer flexible-film packaging — including financially stable end-markets.

MRFF has invested in equipment to recover and separate flexible film from curbside collection systems. It will be operational in nearly 300,000 households in Pennsylvania in the summer, testing how to optimize the flexible-film collection and recycling process, as well as the sorting and baling of the material for sale as PCR.

Imagine if one day you simply could place all your food and household goods packaging in your recycling bin along with other recyclables — even the lightweight pouches, wrappers and packets — and know that they will be collected and turned into valuable material.

Incentivizing consumer participation

It is entirely possible to introduce industry-wide technology that can track a package and effectively reward the consumer for proper post-use collection. Incentivizing behavior change is a must. Packages that contain higher levels of PCR should become irresistible.

Smart and intelligent packaging solutions are opening up a range of opportunities for brands and retailers to better meet consumer needs. New technology is also providing solutions, such as NFC (near-field communications), which allow consumers to interact with packaging via their smartphones.

Imagine if each package you placed in the recycling bin was tracked to the sorting facility and you were rewarded with points for successfully recycling it?

The alliance to end plastic waste

P&G recently took a leadership role along with other companies and partners across the entire value chain to form a new, business-driven, results-oriented initiative that could have a lasting impact to step-change the economics and stop the flow of plastic into the environment.

The Alliance to End Plastic Waste will invest $1.5 billion in solutions that cross governments, development finance, NGOs and more, beginning with areas in the Asia-Pacific region where plastic waste is often mismanaged. More importantly, these world-class companies are bringing their top talent — engineers, scientists, researchers — to complement the capital investment and to deliver solutions that will keep plastic in the supply chain and out of our environment.

Advancing innovation and infrastructure, and creating end markets, will happen only if there is massive public-private partnership and collaboration across industries. Brands will play a key role in driving consumer demand and desire, while incentivizing participation. No single company is large enough to make significant advances alone, and there must be shared risk, shared commitment and shared investment to truly drive scale and unleash the circular economy of plastics.


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Furniture as a service — PaaS or fail?

This article is drawn from the Circular Weekly newsletter from GreenBiz, running Fridays.

Last week, the Swedish furniture giant of flat-pack and meatball fame added sofa-as-a-service to its lineup of iconic industry offerings. IKEA announced a furniture leasing trial to explore “scalable subscription services” for everything from couches to kitchens.

From lighting-as-a-service to the rise of clothing rental, more companies are beginning to catch on to the potential of providing products-as-a-service (PaaS) through rental, leasing, pay-per-use and pay-per-service models for items that traditionally have been purchased outright (and usually landfilled when no longer needed).

Yet while some already have dubbed IKEA’s pilot, which will roll out only in Sweden for now, the “Netflix of furniture,” the details of access over ownership become increasingly more complicated with physical things than with digital ones.

In a new survey on circular economy perceptions and strategies, ING, the Dutch financial institution, asked 300 U.S. executives about the challenges to adopting a PaaS model. It found that managing ongoing product maintenance, adapting sales and distribution models and rethinking product pricing were the three most challenging changes a company would have to make. (The report also found that 62 percent of American companies are planning to move toward circularity, which I found surprising, to say the least. It may speak to the still-evolving definition of “circularity” among companies.)

How will IKEA determine when a chair has reached the end of its usable life? How much should two years of a chair’s life cost compared to a lifetime of ownership? IKEA hopes to find out.

PaaS models also require companies to consider the financial implications of being paid in smaller increments over time, and the intricacies of holding more assets on the balance sheet.

But when companies capitalize on a product’s performance rather than the volume of sales, they are incentivized to invest in durability instead of planning for obsolescence.

IKEA’s furniture rental pilot supports its ambitious goal to become a fully circular and climate-positive business by 2030, highlighted by an effort to decouple the use of virgin materials from the company’s growth, according to its 2018 sustainability report (PDF). In addition to piloting a buy-back program for gently used furniture and offering a national mattress recycling program in the United States, IKEA is also considering selling spare hinges, screws and other parts for furniture no longer stocked in stores, so that its customers can fix IKEA products and keep them in use longer.

As IKEA dips its corporate toes into new business models, it’s important to remember that not all product-as-a-service innovation offers a circular outcome. I’ve learned to always ask what happens next in a material’s life-cycle. If a product ends up in a landfill rather than being refurbished or deconstructed and cycled back into the value chain, it’s not truly circular, even if it’s a step in the right direction.


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What else will batteries unlock?

This article is drawn from the Transport Weekly newsletter from GreenBiz, running Tuesdays.  

Low-cost, high-energy batteries are beginning to do some really cool things such as replace gas peaker plants, power mainstream vehicles and kick-start electric aviation. Here’s another application to add to the list: slash electric vehicle (EV) demand charges.

Say what? Demand charges are a fee that a utility charges for electricity use, based on the highest rate at which the electricity is drawn during a monthly billing cycle. These are fees beyond just the cost of electricity, and they’re thought of as paying for the overhead of the grid gear.

Reports have found that these demand charges have been making public charging stations uneconomic in this early stage of the EV market. If the companies that manage those chargers passed the charges onto EV owners, most would run away screaming and never charge in a public spot again.

To get around this problem, some companies are starting to pair batteries with EV chargers (McKinsey dives into this in a report). The idea is that the battery can charge up when electricity rates are low and charge up vehicles when the demand for electricity is high. Yep, it’s peak shaving, similar to what companies such as Stem have been doing for buildings.

VW’s Electrify America, which is spending $2 billion on charging infrastructure, last week announced that it will work with Tesla to install over 100 of Tesla’s battery stations at some of its EV chargers. Electrify America Chief Operating Officer Brendan Jones said during an event that the No. 1 cost of EV chargers, outside of the capital investment, is demand charges.

Electrify America and Tesla aren’t the only ones adopting this approach. Startup Freewire Technologies has developed a mobile EV battery charger (Mobi), and companies such as Microsoft and LinkedIn have been using Mobis on their corporate campuses, partly to avoid demand charges. 

Down the road, when more electric vehicles are plugging into public chargers, the demand charges will be more spread out and less of a problem. Companies are also focused on rate reform, and convincing utilities around the United States to change pricing structures.

But the interim battery solution is an interesting one. The trend shows how low-cost lithium-ion batteries have emerged as a disruptive tool that can be used for any number of things.

The really cool part is we probably haven’t yet envisioned everything that powerful low-cost, high-energy battery technology can do. Energy storage markets have been so underdeveloped for so long.

This disruptive effect, of course, is occurring for other enabling technologies such as artificial intelligence, wireless networks and low-cost computing chips. All of them have been changing society and industry in many hard-to-predict ways (and some negative ways, too).

But I am eager to see how else these batteries will transform the way we live — and hopefully make energy and transportation more distributed, cleaner and more reliable.  


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Arup pledges $3bn to aid city climate planning through C40 partnership


Arup has renewed its partnership with C40 for another three years

Professional services firm renews partnership with C40 Cities Climate Leadership Group for another three years

Arup has pledged to provide $3bn of advisory support to the C40 Cities Climate Leadership Group, a coalition of global city mayors fighting to tackle climate change, after the two organisations announced a renewal of their partnership for another three years.

The professional services and engineering giant said the figure marked a trebling of its previous $1bn commitment to the C40, which was made in 2015, and would enable the two organisations to build on their work helping cities to plan for the impacts of climate change and the low carbon transition.

Arup and C40 have worked together since 2009 on more than 25 projects, including the Deadline 2020 roadmap aimed at helping cities understand the pace, scale and priorities for action towards meeting the goals of the Paris Agreement on climate change.

Looking forward, the organisations said they planned to focus on exploring how consumption patterns in cities will need to change to help counteract climate change, and how data can aid city decision making and monitor progress against decarbonisation plans.

Gregory Hodkinson, Arup Group’s chairman, said collaboration and knowledge sharing between cities and mayors was vital in helping to prevent dangerous climate change.

“We have pledged to extend our partnership with C40 to build on the work we have done to date,” he said. “More needs to be done to help city leaders with their programmes to reduce emissions and better adapt their populations to the very real threats posed by climate change. Last year’s IPCC special report on global warming reinforced how critical this work is.”

Mark Watts, C40’s executive director, praised the impact of the partnership to date.

“When the Paris Agreement was signed in 2015, C40 and Arup immediately set to work calculating what the deal and the 1.5 degrees global warming target meant for the world’s great cities,” he explained. “Thanks to that ground-breaking analysis, more than 70 C40 cities are now developing climate action plans consistent with the emissions cuts that science tells us are needed to prevent catastrophic climate change – raising their previous ambition by a combined 13 gigatons of carbon, equivalent to the annual emissions of the US, Russia and China combined.”

It came as Arup also announced a partnership with charity Bernard van Leer Foundation in a bid to help designers, planners, and policy makers come up with ways of designing ways of making cities, settlements and refugee camps more child-friendly. 

Source: – Business Green

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IKEA snaps up 25 per cent stake in German offshore wind farm

Owner of furniture giant Ingka Group swoops in after consortium agrees to divest 80 per cent of shares on the project

Ingka Group, the holding company which owns most IKEA stores worldwide, has snapped up a 25 per cent stake in one of Germany’s biggest offshore wind farms, after the current owners agreed to sell 80 per cent of their shares to a consortium of investors.

IKEA said in a statement it paid more than €200m for quarter stake in the 402MW Veja Mate offshore wind farm, which completed commissioning in the German North Sea in 2017.

German asset manager Commerz Real has also paid €200m for 25 per cent of the shares in the project.

The project consists of 67 Siemens turbines with a capacity of 6MW each and is estimated to produce enough electricity to power 400,000 average German homes each year, helping avoid more than 18 million tonnes of CO2 from entering the atmosphere over the project’s lifetime.

“With this 25 percent stake, we make another step towards our 2020 target about renewable energy production exceeding our energy consumption,” said Krister Mattsson, head of Ingka Investments, in reference to IKEA’s green electricity goals. “It supports our sustainability targets, where renewable energy and energy independence play an important role. Investing in wind farms is part of our activities to support the financial strength of the company and contributes to our climate positive ambition.”

Known as IKEA Group until October last year, Ingka owns 367 IKEA stores worldwide across 30 markets.

The deal follows the decision of Copenhagen Infrastructure Partners (CIP) alongside co-shareholders Highland Group Holdings and Siemens Financial Services to sell 80 per cent of their shares in the wind farm to a European consortium of funds managed by Ingka, Commerz Real, wpd invest and KGAL.

Together with debt financing the transaction totals approximately €2.3bn, according to Commerz Real.

CIP said on Wednesday the deal meant it has divested its 23.4 per cent ownership stake, but that it would continue to be debt provider to the wind farm through its CI-II fund.

Highland Group Holdings has also fully divested from the project, but Siemens Financial Services has retained a 20 per cent stake.

Michael Hannibal, partner at CIP, said it was the right time to divest its stake.

“After financial close of the Veja Mate project in June 2015 and the subsequent delivery of the 402MW offshore wind farm four months ahead of schedule and below budget, the divestment of CI-II’s 23.4 per cent ownership stake has been a good opportunity for CIP and its investors to realize part of its investment in Veja Mate,” he said. “CI-II continues to be a debt provider to the project company, which provides a long-term stable cash flow to its investors.”

Source: – Business Green

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‘Urgent priority’: Major rethink required to spur green gas investment

Conservative think tank Bright Blue calls for more funding and regulatory incentives to drive investment in green gas for heating UK homes

Ending the UK’s dependency on natural gas will be essential if the country is to meet its long-term climate targets, and as such a sweeping new plan is required to overhaul regulatory incentives to spur investment in greener technologies, introduce stronger emissions criteria for public procurement, and rethink how new houses are valued.

That is the conclusion of a new report by conservative-leaning think tank Bright Blue today, which argues the government should take steps to increase the supply of low carbon gases such as hydrogen and biomethane while reducing demand for natural gas in the heating sector.

The report calls for new government investment and incentives to encourage gas network decarbonisation as an “urgent priority” in regulator Ofgem’s next price control framework, which runs from April 2021. It makes the case for a new ‘low carbon gas obligation’ on gas suppliers with a requirement to deliver a steadily increasing proportion of biomethane, bioSNG, and hydrogen to the gas network.

More funding for low carbon gas technology and infrastructure should also be made available in Ofgem’s Network Innovation Competition and Network Innovation Allowance, it adds, pointing out that at present over 80 per cent of UK homes are dependent on natural gas for heating and cooking.

And, in order to deliver a higher proportion of hydrogen and biomethane to the existing gas network, the government should seek to amend gas safety regulations, which presently only permit up to 0.1 per cent hydrogen by volume. The report argues safety rules should better reflect the technical capabilities of the gas network to accept higher intensities of H2 and biomethane.

Co-author of the report Wilf Lytton, a senior researcher at Bright Blue, said existing gas regulations were designed “decades ago” and decarbonisation was being held back by low investment and incentives for greener alternatives. But by introducing a new low carbon gas obligation, he said, Ofgem could ensure gas network decarbonisation at the “lowest possible cost” without distorting the market.

“UK gas must be completely decarbonised during the coming three decades if this country is to meet its current and likely future legal emissions reduction target,” said Lytton. “Now, with time running out, the government and Ofgem should approach the task of decarbonising gas with the same fervour as it has applied to delivering low carbon and affordable electricity.”

Elsewhere in today’s report, the think tank calls for a change in methodology in how building Energy Performance Certificate (EPC) ratings are calculated so that it is based on assessing the heat inside a building rather than the running costs calculated by a smart meter, which it argues provides a far less accurate assessment.

In addition, the report proposes new ‘Housing Affordability Assessments’ (HAA) should be introduced for new homes, taking account of a property’s sale price and maintenance costs over its expected lifetime, including annual energy bills. An HAA rating would help increase demand for more energy efficient homes, Bright Blue argues.

Further recommendations include upping the minimum efficiency requirement for domestic gas boilers from 92 to 95 per cent, introducing green criteria as part of public procurement of energy efficiency and renewable heat technologies in public estates, and establishing a new district heat network regulatory unit within Ofgem.

Although significant strides have been made in curbing the use of fossil fuels to generate electricity, heating is widely regarded as one of the more challenging areas of the UK economy to decarbonise.

Several initiatives have looked at introducing hydrogen as a low carbon alternative to heating homes using the UK’s existing natural gas infrastructure. However, critics argue switching to hydrogen and other forms of green gas for heating would be hugely expensive and technically challenging.

The Committee on Climate Change (CCC) last year described hydrogen as “credible” for use as green energy in the UK, but that it is currently hampered by the lack of any government plan to develop a hydrogen supply chain in the near future.

In responsetpo today’s report, Energy and Clean Growth Minister Claire Perry signalled her support for green gas alternatives, arguing the UK needed to “get serious in tackling heat” if it was to remain a world climate leader.

“This welcome report points to policy solutions that build on the strength of our natural gas sector where we are a world leader, and the hugely valuable assets of our gas networks,” she said. “Hydrogen and Biomethane can help deliver serious climate action through our existing infrastructure, keeping consumers on board and maintaining the flexibility and resilience provided by the gas system.”

But David Smith, chief executive of the Energy Networks Association (ENA), said decarbonising gas was “vital” for meeting UK climate change targets, and urged the government to now “make a clear decision” on the future of the UK’s gas networks.

“Gas network operators have led the way in developing the technology we need to do [decarbonise], but we need government to make a clear decision on the long-term future of Britain’s gas networks so they can continue that work,” he said.

Source: – Business Green

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BP Energy Outlook: Renewables set to grow ‘faster than any fuel in history’, but emissions keep rising

Oil giant publishes annual report setting out a range of scenarios for the energy sector, ranging from Pars Agreement compatible decarbonisation to soaring global energy demand

Renewables are set to penetrate the global energy system “faster than any fuel in history” according to the latest Energy Outlook forecast from BP, which dramatically ramps up the role wind and solar power will play in delivering the world’s energy over the next 20 years. 

Published today, the annual Energy Outlook report sets out a range of scenarios for the future development of the energy industry that highlight both the rapid expansion of the renewables industry and the likelihood global greenhouse gas emissions will keep rising in defiance of international targets. 

Under its ‘Evolving Transition’ (ET) scenario, which is based on government policies and technologies progressing largely in line with recent trends, is widely regarded as a base case scenario.

According to this year’s ET scenario BP suggests global energy demand will grow by around a third through to 2040, largely driven by continued rapid economic growth in Asia.

But more of this energy demand is forecast to be met by renewables than ever before. The company envisages 85 per cent of the growth in energy supply being delivered by renewables and natural gas, with renewables becoming the largest source of global power generation by 2040.

“The pace at which renewable energy penetrates the global energy system is faster than for any fuel in history,” the report states.

At the same time the scenario predicts global coal demand will remain flat and oil demand will grow for around 10 years before plateauing as efficiency gains and the emergence of clean technologies accelerate.

Thanks in part to the rise of clean power, emissions are set to grow more slowly than in previous forecasts. BP said today CO2 emissions from energy use are forecasted to grow by only seven per cent by 2040 – last year’s Outlook predicted a 10 per cent growth in emissions by the same date.

However this will almost certainly still be enough to ensure the world breaches the emissions reductions goals of the Paris Agreement. 

BP said the scenario “signal[s] the need for a comprehensive set of policy measures to achieve a substantial reduction in carbon emissions”.

Meanwhile BP has also radically reassessed the role of China in the world’s energy mix, revising down the country’s predicted energy demand in 2040 by a full seven per cent this year as the country “adjust to a more sustainable pattern of economic growth”. Much of this downward revision was fuelled by a reassessment of China’s industrial energy demand, which is being curbed thanks to business investments in energy efficiency and an economy-wide shift away from the most energy-intensive industrial activities.

In fact, since 2014 BP’s outlook for China has shifted significantly. BP has revised down China’s expected industrial demand by 22 per cent, and its coal demand by 37 per cent, over the period, delivering a four per cent downward revision to its expectations for global energy demand. 

“The shift in China’s fuel mix directly accounts for roughly 80 per cent of the downward revision to global coal consumption, and around a third of the upward revision to the outlook for renewables over the past five years,” BP noted. “The overall impact on renewables is even greater since the quicker adoption of renewable energy in China helps to drive down the costs of wind and solar energy as they move down their learning curves more quickly, increasing the penetration of renewables in other parts of the world.”

Nevertheless, China is set to remain as the world’s largest consumer of energy in 2040, challenged for the title only by India.

However, the report also acknowledges the huge uncertainties facing the energy industry as the clean energy transition accelerates and pressure on governments to deliver bolder climate policies intensifies.

“The Outlook again brings into sharp focus just how fast the world’s energy systems are changing, and how the dual challenge of more energy with fewer emissions is framing the future,” said BP chief executive Bob Dudley. “Meeting this challenge will undoubtedly require many forms of energy to play a role.”

Alongside the ‘Evolving Transition’ scenario, BP sets out a ‘more energy’ scenario where governments seek to more rapidly increase energy access in developing economies, a ‘less globalisation scenario’ where trade disputes and protectionism dampen GDP growth and fuel fears over energy security, and a ‘rapid transition’ scenario where governments deliver more ambitious decarbonisation policies that are broadly in line with the Paris Agreement.

“The rapid transition scenario is the combination of analyses throughout the Outlook which brings together in a single scenario the policy measures in separate lower carbon scenarios for industry and buildings, transport and power,” BP explained. “Doing so results in around a 45 per cent decline in carbon emissions by 2040 relative to current levels – which is broadly in the middle of a sample of external projections with claim to be consistent with meeting the Paris climate goals.”

Under the scenario steep emissions reductions are delivered through rapid gains in energy efficiency, a faster switch to lower carbon fuels, higher carbon prices, and the emergence of a CCUS industry.

However, it argues that even under this scenario the bulk of the emissions reductions come from the power sector and cuts from the transport sector through to 2040 remain relatively small.

“Polices aimed at the power sector are central to achieving a material reduction in carbon emissions over the next 20 years…most of the low-hanging fruit in terms of reducing carbon emissions is outside of the transport sector,” said BP’s group chief economist Spencer Dale.

BP also warns that even if the world moves to a Paris Agreement compatible decarbonisation trajectory further steep emissions cuts will be needed beyond 2040, including the development of negative emissions technologies.  

In addition, the report highlights the growing importance of demand for plastic to the oil industry, projecting that the non-combusted use of liquid fuels in industry, particularly as a feedstock for petrochemicals, will prove the single largest market over the next 20 years. As such, it envisages a scenario where the regulation of plastics is tightened quickly in the coming years leading to a worldwide ban on the use of all single-use plastics from 2040 onwards. 

The report notes that such a scenario would lead to lower than anticipated demand for oil, but notes that the full impact on the environment would depend on the alternative materials that are used in place of single-use plastics.

The Outlook report is now set to be pored over by analysts, investors, and environmental campaigners, who have in the past accused BP of systematically under-estimating the pace of the clean tech roll out and talking up the prospects for fossil fuel demand in the coming decades, even as it has moved to increase its investment in low carbon technologies.

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Source: – Business Green