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ICTU Round Table

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Title: ICTU Round Table


1
Business (and Job) Opportunities in the
Environmental Goods and Services Sector

  • ICTU Round Table
  • 24th June 2009
  • Dr. Peter Brennan, Managing Director

2
Opening Remarks
  • Regulatory framework largely agreed good news as
    investors respond to clear policy signals
  • Peak oil, sustainable development and global
    warming are the key drivers
  • Ireland is playing catch-up
  • Areas of Irelands competitive advantage known
    but awaiting full commercial exploitation
  • Very significant investments in EGS at global
    level
  • Who is in charge? 21 agencies/Departments in this
    space
  • Critical that all perceived barriers to
    investment be removed
  • Significant jobs potential if quick,
    well-resourced and ambitious projects are
    supported by Exchequer with private investment
  • Rapid expansion of the EGS sector should be the
    Governments over-arching priority Green Jobs
    are a fact not a myth

3
Defining the Sector
  • The EGS sector encompasses a very wide range of
    activities and definitions of the sector can, and
    do, differ.
  • The US Department of Commerce defines it as those
    environmental technologies that "advance
    sustainable development by reducing risk,
    enhancing cost-effectiveness, improving process
    efficiency, and creating products and processes
    that are environmentally beneficial or benign.
  • The European Commission has adopted the
    OECD/Eurostat definition which states that The
    environmental goods and services industry
    consists of activities which produce goods and
    services to measure, prevent, limit, minimise or
    correct environmental damage to water, air and
    soil, as well as problems related to waste, noise
    and eco systems. This includes cleaner
    technologies, products and services that reduce
    environmental risk and minimise pollution and
    resource use.

4
The Irish EGS Sector
  • Air Pollution Control
  • Cleaner Technologies and Processes
  • Environmental Consultancy
  • Environmental Monitoring
  • Energy Efficiency
  • Energy Management and Auditing
  • Marine Pollution Control
  • Noise and Vibration Control
  • Remediation and Reclamation of Land
  • Renewable Energy
  • Waste Management and Recycling
  • Water Supply and Wastewater Treatment

5
The Green Economy
  • Global market estimated at 3 trillion
  • Non-energy element valued at 650 billion i.e.
    four times size of global software industry
  • UK market forecast to be worth 152 billion by
    2020
  • US to invest 140 billion as part of economic
    stimulus package
  • EU has approved 105 billion in co-financing for
    green economy projects with 48 billion
    ear-marked for climate change projects
  • High Level Action Group on the Green Economy set
    up (May 2009)
  • Key growth sectors in Ireland were identified in
    August 2008 and include
  • Water and waste water treatment
  • Renewable energy
  • Energy efficiency

6
Venture Capital Activity
  • The year 2008 - the coming of age of the
    Greentech or Cleantech sector
  • Global VC investments was 6.3 billion up from
    4.7 billion in 2007
  • The UK was the main source of cleantech
    investment in Europe, with 40 of all European
    venture capital backed cleantech companies based
    in the UK
  • It is estimated that almost half of the UK
    cleantech deals completed in 2006 received public
    sector support
  • With the exception of the water sector, the vast
    majority of the investment is in renewable energy
    (solar, wind and biofuels)
  • In the US, investment in solar energy has
    overtaken investment in biofuels
  • To date, with notable exceptions (including ESBs
    Novus Modus, BoI, AIB, KBC, Dolmen Green Effects
    Fund, Green Investments), little investment in
    EGS sector by VC community in Ireland
  • 75 of VC investments are under 2m (UK, 2009)
  • IS IRELAND GETTING ITS SHARE OF THIS INVESTMENT
    AND IF NOT WHY NOT?

7
Drivers in Renewable Energy/Energy Efficiency
  • Climate change
  • Energy Security
  • Oil depletion
  • Aging power infrastructure (developed world)
  • Energy as development bottleneck
    (rapidly-industrialising countries)
  • Energy poverty (slowly developing countries)
  • Deregulation innovation, funds, entrepreneurship
  • Breakthroughs in materials science
  • Low-cost communication technologies
  • LEADING TO Fundamental re-engineering of the
    worlds energy industry around low carbon
    solutions and architecture

8
Drivers Environmental ConsultantsSurvey
9
Where Will The Jobs Come From? Big Ideas!
  • Electric Vehicles
  • Retrofitting
  • Energy efficiency
  • Smart transport
  • Wind
  • Other Renewables
  • Forestry
  • Water
  • Green Tourism

10
Electric
Vehicles
  • Potentially the single biggest carbon project for
    the island of Ireland
  • Simon Coveneys report makes the case
  • Key Messages
  • Current level of ambition far too low
  • By 2030 all cars should be EVs (350,000 by 2020)
  • Technology developing fast
  • Ireland the ideal laboratory
  • 8m/tonnes reduction in carbon per annum
  • Jobs potential arises in relation to
  • RD for roll-out at EU level
  • Manufacturing of EVs (EVs cost a fraction of
    combustion vehicles)
  • Battery/re-charging infrastructure (including
    domestic)
  • Grid connections
  • WHAT IS THE JOB POTENTIAL OF THIS INITIATIVE?

11
Retrofitting
  • Some 1m of 1.5m Irish homes pre-date 1990
    (275,000 houses vacant at time of 2006 census)
  • Households spend some 2.2 billion on energy
    (average of 1,600 (2005)) and emit 11.9Mt of
    carbon pa around 8 tonnes per house twice that
    of an average cow!
  • 35 of heat loss through walls and 25 through
    roof not technology intensive
  • SEIs HESS has budget (2009) of just 49m i.e. a
    grant of 3,500 for 14,000 homes. Is this enough?
  • If average cost of typical household retrofit was
    7,500 then an investment of 13.5 billion needed
  • In addition, public buildings and commercial
    offices also need to improve their energy
    efficiency in line with the NEEAP
  • Retrofitting is labour intensive, is capable of
    using Irish materials, will return 40 of spend
    to the Exchequer so why then is level of
    activity so low?
  • COULD RETROFITTING 2M HOMES/BUILDINGS OVER FIVE
    YEARS GENERATE 20,000 JOBS?

12
Energy Efficiency
  • Most cost efficient way to reduce dependence on
    fossil fuels (and consequently to reduce GHG
    emissions)
  • NEEAP (2009-2020) sets out Governments plans but
    detailed implementation budget not announced
  • Could 2 million smart meters be installed at same
    time as water meters? (only 2,223 smart meters
    installed to date (March 2009))
  • Expanding scope of ACA Scheme would leverage more
    investment
  • Potential jobs content of NEEAP (assuming full
    implementation) should be assessed
  • Also look to export potential McKinseys has
    estimated (2009) that global energy efficiency
    investment opportunities could be worth 131
    billion
  • AS MOST ENERGY EFFICIENT EQUIPMENT IS IMPORTED
    IS THERE SCOPE FOR MORE INDIGENOUS MANUFACTURE?

13
Smart(er) Transport
  • smartertravelgtgtgt sets ambition but specific
    measures not costed (within overall budget
    envelope of 4.5bn over 11 years)
  • What is CIEs carbon footprint and what is being
    done to invest in public transport to reduce GHG
    emissions?
  • Electrify the Belfast to Cork line and all Dublin
    and Cork commuter lines using surplus wind energy
  • Replace all petrol/diesel vehicles with EVs
  • Reform legislation to incentive private
    investors more buses more jobs
  • Promote e-working quality of life issues a
    significant issue for commuters
  • Start planning now for Transport 22 and factor in
    potential carbon/energy savings into capital
    appraisal guidelines

14
Wind
  • 1,077 Mw connected to the national grid (June
    2009) i.e. supply for 700,000 homes wind
    accounted for some 40 of all generation in
    recent months
  • 2020 target requires another 6,480 Mw
  • Micro-generation (4,500 units) will also
    contribute
  • 16bn of potential investments in the pipeline
    awaiting CER approval
  • Deloittes estimate (June 2009) jobs could rise
    from 1,500 to over 10,000 by 2020.
  • Turbines account for 75 of total cost
  • Spirit of Irelands wind storage project a major
    innovation
  • BUTgtgtgtgt
  • Offshore only viable at 200/barrel hence need
    for REFIT
  • Turbine manufacturing opportunity not identified
    as a priority (Galways CF Group the
    pathfinder)
  • Skills shortages a real problem
  • Offshore planning legislation (Foreshore Acts)
    should be replaced by more modern legislation

15
Other Renewables
  • Biomass Bioenergy Action Plan (2007) BioSparks
    40m investment in Claremorris GEGA a major
    player
  • Biofuels must be sustainable in past year algal
    biofuel projects got 1 billion in VC
    investments bio-refinery and bio-energy
    competence centres set up
  • Ocean AEA Technologies forecast of global market
    is 200 billion Bacon/ESRI study (2005) estimate
    1,900 Irish jobs could be created by 2020 SEI a
    lead player
  • Tidal Irelands OpenHydro leading the way
  • Solar Genersys Ireland believes solar could
    cater for 30 of households heating needs but
    10-year payback
  • Geothermal GAI examining regulatory framework
    also 10-year payback
  • HOW MANY IRISH COMPANIES WILL BECOME WORLD
    LEADERS?

16
Forestry
  • Some 40 of total GHG emissions come from land
    use (12.2 million cattle primarily)
  • Forests act as a carbon sink hence NCCS target of
    5Mt of offsets by 2020 (from 2Mt currently)
  • Not achievable unless massive increase in annual
    level of planting has fallen to just 6,000
    hectares 20,000 hectares is (1996) target
  • Has Coilte a conflict of interest?
  • Has anyone realised that carbon sequestered in
    forests has a value? (5Mt _at_ 35/tonne equals
    175m per annum)?
  • Remove the barriers preventing investment
  • AS FORESTRY CAN CREATE RURAL JOBS WHO IS DRIVING
    THE INVESTMENT OPPORTUNITIES?

17
Water
  • Water is a finite commodity global warming will
    put a price on this scarce resource
  • World Economic Forum Water Project highlights
    scale of problem
  • EU WFD the driver
  • Need one National Authority not 32
  • Significant additional jobs will be created only
    when domestic water is metered
  • NDP (to 2013) spend of 4.7 billion scattered
    among local authorities no economies of scale
    and unit cost of procurement too high as a result
  • Very limited RD activity
  • Investment Programme for Greater Dublin Region
    (to 2035) the largest job creation project

18
Green Tourism
  • Consumers are now far more aware of the impact of
    flying and travelling in terms of carbon
    emissions and are prepared to pay more
  • Some companies turning this into a business
    opportunity
  • Bord Failte published Eco-Tourism Handbook (March
    2009)
  • Airlines should introduce carbon offset products
    to attract tourists to Ireland
  • NCC could offer offsets to attract convention
    visitors
  • UKs ICARUS Project helps companies implement a
    Carbon Reduction Programme
  • US car rental companies are offering carbon
    offsetting
  • Inchydoney Island Hotel and Spa has largest (80
    sq metres) array of solar panels in Ireland
  • Carbon offsets could be invested in Irish
    projects such as forests
  • COULD IRELAND BECOME A TRULY GREEN TOURISM
    DESTINATION?

19
One Companys Contribution
  • The ESB announced the creation of 3,700 green
    economy jobs as follows
  • Smart networking 750
  • Smart metering 750
  • EVs 600
  • Wind energy 300
  • Property construction 550
  • New technologies 350
  • Home insulation 250
  • Other 150

20
RD
  • 2020 Vision Ireland will be at the forefront of
    energy research supporting the development of
    energy efficiency and renewable technologies
    (NEEAP)
  • About 35 trillion will be needed to develop and
    deploy new clean technologies between now and
    2050 (IEA)
  • Not at all clear how much being spent annually on
    EGS RD in Ireland
  • SEI, including Ocean Energy Development 7m
    (2009)
  • Charles Parsons Energy Research Awards 20m over
    seven years
  • EIs RD Fund and Competence Centres
  • Irish Energy Research Council has identified
    priority areas (May 2008)
  • SFIs remit now includes sustainable energy and
    energy-efficient technologies with a 90m budget
    (six years to 2013)
  • 7FP has strong EGS focus
  • IS THIS LEVEL OF EGS RD ENOUGH TO ACHIEVE 2020
    VISION?

21
Where Will We Get The Money?
  • Carbon tax could easily raise 1bn a year
  • ETS auctioning revenue available from 2013 and
    could be worth 630 per annum by 2020 (assuming
    18Mt of allowances sold at 35/tonne)
  • Hypothecate monies into a Green Fund(s)?
  • Go one step further set up Anglo Irish as a bank
    with a dedicated mandate to provide project
    finance and working capital for Green Economy
    jobs, and to trade carbon offsets to support
    Irelands aim to become a Green Economy
  • Many claims on this windfall so how best to use
    this green revenue?
  • Publication of MACC will inform decision-taking
  • What are your views on this split?
  • 25 for fuel poverty
  • 30 for retrofitting
  • 15 for REFIT
  • 15 for NEEAP
  • 15 for other green economy incentives

22
What Works In Europe
  • The WRAP Capital Grant Scheme (UK)
  • The Carbon Trust Enhanced Capital Allowance
    Scheme (UK)
  • Fideme Investment Fund (F)
  • Programme for Cleaner Technology (DK)
  • Green Financing Measure (N)
  • Energy Investment Tax Relief Scheme (N)
  • SenterNovem Carbon Reduction Plan (N)
  • kfW Bank Programme for investment in renewable
    energy (D)
  • (Source EPS Consulting, August 2008)
  • WHAT TYPES OF INCENTIVE SCHEMES COULD WORK IN
    IRELAND?

23
What Others Are Doing
  • US to invest 6.6 billion in green economy RD
  • Siemens have already manufactured 6,400 wind
    turbines
  • Denmarks wind turbine industry now consists of
    200 companies and has a 35 share of global
    markets
  • BP to invest 500m in Energy BioScience Institute
    (UC Berkeley)
  • Austria has a Master Plan for Environmental
    Technologies and funds sector and sub-sector EGS
    networks
  • UKs Commission on Environmental Markets and
    Economic Performance has already set national
    strategy (November 2007) Carbon Reduction
    Commitment (which will save business 1 billion
    by 2020) and Low Carbon Industrial Strategy
    launched
  • IN CONTRAST, IRELAND HAS JUST SET UP A HIGH
    LEVEL ACTION GROUP ON THE GREEN ECONOMY WE ARE
    WAY BEHIND OUR COMPETITORS

24
Sources
  • EPS Consulting report on EGS sector
  • www.epsconsult.ie/news/greeneconomy
  • NEEAP http//www.dcenr.gov.ie/NR/rdonlyres/FC3D76
    AF-7FF1-483F-81CD-52DCB0C73097/0/NEEAP_full_launch
    _report.pdf
  • Smarter Travel
  • http//www.transport.ie/upload/general/11284-0.pd
    f
  • Simon Coveneys EV report
  • http//www.oireachtas.ie/documents/committees30th
    dail/j-climate_change/reports_2008/20090428.pdf

25
Think About It
  • Business must become green to grow and to do
    this it is necessary to include climate change
    policies into corporate DNA (CBI, November 2007)
  • Whatever uncertainties exist regarding future
    oil production and project demand growth, the
    ultimate effect will be that the price will at
    first escalate and then soar (International
    Energy Agency, 2008)
  • The development of alternative energy should
    create more than 20 million jobs globally, with
    3.5 million green jobs possible in Europe and the
    US in the area of energy efficiency alone (ILO,
    September 2008)
  • I realise that there are those out there who say
    that these plans are too ambitious. To them I say
    that the challenges we face are too large to
    ignore (Barack Obama, March 2009)
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