Next in the hotseat is Josh Fox, the Oscar-nominated director of the environmental film Gasland. He will be answering your questions next Friday, February 11th. Send in your questions for consideration by the end of Sunday, February 6th to firstname.lastname@example.org.
But for now, over to James:
Renewable heat market
Do you see a market evolving for the free installation of renewable heat, funded by the Renewable Heat Incentive, once it is confirmed? If so, what scale do you see this attaining?
Daniel White, commercial consultant, globalenergysystems.co.uk
We’ve made several investments in renewable heat, driven by the carbon price in emerging markets. We would like to see incentives put in place across the world to make better use of waste heat as this is valuable resource.
It’s a bit early to say how the RHI will work, but hopefully it will communicate the value of waste heat recovery, particularly in manufacturing and SMEs. There may be ways in which the income can increase the capital value of commercial buildings as well as reduce the operating costs.
We would like to see incentives put in place across the world to make better use of waste heat as this is valuable resource
We have high hopes for the UK market also to adopt technologies such as heat pumps and solar thermal under the Green Deal.
A market for the free installation of renewable heat equipment depends on mechanisms included in the RHI, so it is difficult to say until the legislation is announced. However it is possible, in a similar way to the free photovoltaic (PV) models supported by renewable feed-in tariffs, that there will be businesses looking to offer a free installation of renewable heat.
Size of the market
The scale of this market will naturally be bounded by the level of incentive available (it is expected to be capped), and the returns that can be generated. If sufficient returns are not available, then it is unlikely to stimulate a free installation model.
There is concern that financing for ground-sourced heat pumps will be more difficult than solar PV, which could be removed and sold to recover loans more easily. Similarly plumbing aspects of solar thermal might be trickier than solar PV from a lender’s perspective.
What do you think will be the future for biofuels? We will need to have a renewable economy in the decades ahead. What is the right approach to make sure we get there without compromising food security and ecosystem services? Is it possible?
Tony Juniper, green campaigner
There is a relationship between energy, water and food security that assists answering this question. We cannot use productive agricultural land to grow fuel that otherwise could be used to grow food and we need to value the water consumption in both products.
There have been various examples of poor public policy in the biofuels area (US corn), but it’s foolish to say all biofuels are bad because of the risk of substituting fuel for food. Even first generation biofuels can work in the right circumstances. On balance Brazilian ethanol is a success story.
In the end I suspect biofuels will make a modest contribution to the liquid fuels markets of the world
We see exciting prospects in second and third generation biofuels which enable us to use land that is not competing with food production, not dependent on vast quantities of water and where there is a CO2 reduction benefit.
We are now also able to use agricultural waste to create fuels and saltwater algae forms can even be created to produce biofuel of remarkable purity. If a biofuel can be produced at a scale for aviation, without taking vast amounts of land or water, that would be a breakthrough.
In the end I suspect biofuels will make a modest contribution to the liquid fuels markets of the world, but given the size of those markets it is still worthwhile continuing to invest and innovate.
But we must value water one way or another.
Carbon pricing vs regulation
What do you think about the respective merits of CO2 emission pricing versus command-and-control regulation of CO2 in order to trigger the required low-carbon industrial revolution?
Eivind Hoff, director, Bellona Europa
I favour whatever works and that will vary country to country and culture to culture. I still believe that emission pricing works better in policy-driven markets, because they distribute the obligation and the incentive very widely and they encourage both efficiency in capital allocation and effectiveness in taking more carbon out of the atmosphere. There is an alignment interest between investor and environment. Each wants a return – more tonnes reduced at least cost fastest. Then the law makers can reset the system to require more to be done in the public interest; if the science requires it
I’m not convinced that carbon taxes work beyond local or national jurisdictions but I am happy if there is political will and community support to set and implement them.
The emissions trading system did allow flexibility to European industry during the deep recession and decline in industrial output
Regulation is extremely hard, but not impossible, to harmonise across borders. People tend to comply with what they are told to do, in the event of tax and regulation. Whereas within a policy driven market, there is a permanent incentive to go beyond compliance as you can collect a bigger aware for reducing emission from trading with your competitors. The problem is the system is difficult to administer. There has been too much complexity, uncertainty, and several confidence shocks and that has deterred sustained investment.
It must be said though that the emissions trading system did allow flexibility to European industry during the deep recession and decline in industrial output. Emissions went down with the fall in output and so did the price. The system only exists to reduce emissions not to punish industry. Would a tax or regulation have worked as well?
What impact is the sudden emergence and associated removal of cost and security of supply issues surrounding shale gas having on your investors?
Nick Grealy, No Hot Air
Shale gas is highly significant to the global energy markets and is a massive source of supply found in countries where energy security fears are high, such as US, Europe, as well as big commodity exporters such as and Australia.
This huge supply will provide a serious challenge to coal producers and those who challenge the fossil economy from the renewables sector. The sheer size of energy demand over the next few decades encourages me to think that gas will be chosen ahead of coal and in some instances nuclear, but will not stop the trend towards zero-carbon technologies.
The gas discoveries are helpful for buying time, making use of existing infrastructure and in avoiding the economic effects of a sudden spike in oil prices. However there are significant water usage issues and land degradation problems to overcome and these discoveries must not inhibit the investment in low carbon infrastructure. Of course, a price for carbon would favour gas versus coal.