Monday, August 29, 2016

Energy efficiency is the US electricity sector’s third largest resource

[Note: this article first appeared on The Fifth Estate website on 23 August]

New analysis of 10 years of state-level data on the way utilities operate in America has found that energy efficiency is the third largest resource in the electric power sector.

The American Council for an Energy-Efficient Economy, which performed the analysis, also found that energy efficiency has averted the need to build the equivalent of 313 power plants since 1990, and avoided 490 million tonnes of carbon dioxide emissions in 2015 alone.

Actual the benefits of energy efficiency to the US economy

Another surprising result is that electricity consumption in the United States has plateaued in recent years, even as the American economy has grown.

 Electricity usage versus GDP

A $90 billion a year saving

As a result customers have saved US$90 billion (AU$118b) a year on bills. This translates to an average of $840 a year (AU$1100) for each American household.

Other benefits include economic development, job creation, community and grid resilience, combating fuel poverty, and improved health, safety and comfort.

Energy efficiency could soon be number one resource

Progress has been so successful that ACEEE is daring to predict that energy efficiency could become the US’s number one resource by 2030, if further targeted policies are adopted. And they say any other country can emulate this progress by adopting similar policies.

 Electricity usage compared in the US in 2030 with and without energy efficiency

These policies are:

  • improved efficiency standards for appliances and equipment
  • giving utilities energy efficiency targets of, say, 1.5 per cent a year
  • rigorous enforcement of energy-saving codes for buildings, both existing and new
ACEEE calculates that in the US, applying these policies would avoid the need for a further 487 power plants.

Action at the state level has been crucial for these achievements. According to ACEEE, improving energy efficiency has helped states comply with the Environmental Protection Agency’s Clean Power Plan, which tackles greenhouse gas emissions in the electricity sector. It says most states could meet at least 25 per cent of their targets through efficiency policies and related investments and many could even achieve 100 per cent.

According to the EPA, treating energy efficiency as a resource could benefit other sectors as well, particularly the transportation sector, which in the US is responsible for 26.5 per cent of greenhouse gas emissions. It says the sector could potentially reach zero emissions by 2050, with half of the savings coming from energy efficiency.

Treating energy efficiency as a resource has further benefits: it means that it can be traded in the same way as other energy resources such as oil and gas. This approach is advocated by the vice president of the European Commission in charge of Energy Union, Maroš Šef?ovi?.

We need to adopt the language of energy traders

Steven Fawkes
Steven Fawkes

Energy efficiency expert Dr Steven Fawkes thinks the industry should adopt the language of energy traders to encourage investors and banks to trade in the assets that are represented by potential energy efficiency savings.

He says: “Given that nearly every building has reserves of energy efficiency potential we need to think about mechanisms that value that potential, just like we value oil and gas fields before they are exploited.”

Energy trading could be worth €70-100 billion a year

Besides ACEEE, this approach is being pioneered by organisations such as the Energy Efficiency Financial Institutions Group De-risking Project and the Investor Confidence Project. These have put a value on the potential market for energy efficiency resources of around €70-100 billion (AU$104-148 billion) a year in Europe alone. For comparison, in 2015 US$58 billion (AU$76b) was invested into renewables, down sharply from US$132 billion (AU$173b) in 2011.

And, like ACEEE, Fawkes points to the many non-energy benefits that come from improved energy efficiency – everything from increased sales and productivity through to health and wellbeing effects – arguing that these “are much more strategic and attractive to decision-makers than ‘mere’ energy savings”.

As a leading European campaigner on this topic, he observes that “many institutional investors and banks are now really interested in energy efficiency – this is a major change over the last three to five years”.

“Efficiency has real economic benefits, it has impact and it is not reliant on subsidies. Because of this the efficiency industry can no longer rely on that old excuse… there is no money. There is plenty of money but a lack of investable deals.”

But there are still many barriers to investment, to actual deals taking place compared to the potential. These are being addressed by the above organisations as follows:

The EEFIG De-risking project, funded by the European Commission, is building a database of project performance using several hundred projects so that owners and investors can see how projects actually perform in order to build an actuarial database of actual performance – both energy and financial performance. It is also developing standardised underwriting procedures such that banks and financial institutions can better assess both the value and the risks of energy efficiency projects that will lead to better pricing and help to build capacity.

The Investor Confidence Project began in US and has been imported to Europe by Fawkes. It is introducing standardisation to the industry with a set of common protocols for developing and documenting projects. It is also introducing a form of project developer and quality assurance called Investor Ready Energy Efficiency. Projects are accredited. This gives confidence to investors and reduces transaction costs.

According to Fawkes, “Our investor network has over €1 billion (AU$1.48b) they would like to deploy into energy efficiency and many of them offer lower fees or interest rates for standardised ICP accredited projects.”

Back to that ACEEE report. It finds further barriers to investment in energy efficiency as follows:

  • Imperfect information: Consumers have limited awareness of energy performance of equipment and buildings and limited access to energy usage data.
  • Split incentives: Rental properties are a common example. Because tenants pay the energy bills, landlords have little incentive to make efficiency investments to reduce energy bills.
  • Regulatory and legal barriers: In many electric utility business models, greater profits are tied to selling more energy and making more capital investments. These objectives are at odds with energy efficiency, whose goal is to reduce energy waste.
  • Externalities: The environmental, health and security costs to society of energy production and transmission are not added to energy prices. Although energy efficiency helps reduce these costs, the savings are rarely recognised.
All of these can be addressed by sensible policies of the kind outlined in their report.

For example, in a recent study, ACEEE analysed 18 measures, including reducing plug loads, conservation voltage reduction and smart manufacturing. It found these could collectively save 22 per cent of total projected electricity use in 2030.

“These savings could effectively bend the curve of energy consumption so we use increasingly less energy while growing our economy,” it says.

It goes further by arguing that “energy efficiency and renewable energy working together can lower a building’s carbon footprint to zero”.

Nevertheless, “critical support is needed from government, industry, and the non-profit community so that scientists, analysts and advocates can continue to save energy everywhere it’s wasted”.

David Thorpe is the author of:

Monday, August 22, 2016

A challenge for Google’s Deep Mind: solving the Jevons Paradox

Note: this post was originally published on The Fifth Estate on 16 August 2016. 

Google has announced that it has used Deep Mind, the neural network computing developed by its AI research company, to reduce the energy used for cooling its data centres by 40 per cent. Sounds impressive, until you realise that Google’s energy use is doubling every year.

Data centres are not very efficient for several reasons:
  1. Servers are generally inefficient, producing lots of heat
  2. Just cooling them uses a huge amount of power
  3. The companies running data centres are rewarded for responding quickly to demands on server uses. They are not rewarded for saving energy, therefore they keep energy use at a maximum continuously
  4. With the inexorable expansion of “cloud computing”, this trend is set to continue
So while Google’s announcement sounds great let’s look at what is actually happening to data centre energy use – in fact energy use in ICT generally. And it’s not good.

Even if data centres did use energy efficiently their overall use is still increasing at a greater rate. Google’s total power usage appears to have increased by a factor of 12 in the last four years, almost doubling every year.

It likes to boast about its use of renewable energy. It recently purchased 781 megawatts of solar and wind power to power its data centres. But the company also says renewable energy makes up just 37 per cent of its usage and with a total of 1.2 gigawatts of renewable energy, that makes its total data centre usage around 3.2GW.

But this itself is in the context of Google’s overall energy usage this year, estimated to be 48.927GW [for source see comments to the article linked to above].

The worldwide explosion of data centres and their increasing energy usage is a direct result of the spread of smart phones, tablets, apps and video-on-demand. We expect all of these things fast and free and that is what is fuelling the expansion.

The number of annually produced smartphones is expected to rise between 2010 and 2030 from around 350 million to around 3000 million units, and for tablets from 50 to 560 million units.

A worst-case projection for the global use of energy in ICT puts it at as much as 51 per cent of global electricity and 23 per cent of the globally released greenhouse gas emissions in 2030. Totally unsustainable? Right.

The Jevons Paradox

We seem to be seeing another example of the Jevons Paradox, the conundrum proposed by economist William Stanley Jevons. First postulated in the 1860s, it states that increases in efficiency will not result in savings, instead they will result in more expenditure or consumption.

Jevons argued, in his prescient 1865 book The Coal Question, that the effective and efficient use of energy leads to an increase in energy consumption. In his words:

“It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth…”

Increased energy efficiency tends to increase energy consumption by two means. First, increased energy efficiency makes the use of energy relatively cheaper, thus encouraging increased use (the direct rebound effect). Second, increased energy efficiency leads to increased economic growth, which pulls up energy use for the whole economy (the indirect effect). It applies to energy efficiency and resource efficiency.

When people save money on saving energy they have extra capital. This inevitably gets spent resulting in more consumption. The same applies to saving money on manufacturing products by reducing the amount of resources needed. More products get produced. Economists and environmentalists often use the amount of spending as a proxy for energy consumption or ecological footprint. The only way to really reduce environmental impacts is to spend, or consume, less.

As a whole, we on our beautiful unique planet Earth are already using two planets’ worth of resources and our numbers are rising, expected to reach 10 billion by the end of the century. This includes a growing middle class that is consuming more and more, causing some minerals and other resources expected to run out according to their relative rarity over the next century.

You can see why this is a vitally important problem to solve. It is a subset of the problem: how do we give everybody an equally of good standard of life given limited resources on the planet?

A question of entropy

Ultimately it is a question of entropy. For example, urban living can be seen as an entropy accelerator: resources are depleted and downgraded and the limited availability of low entropy energy is their ultimate constraint and a constraint on long-term well-being. Local air pollution and global climate change are a high entropy expression of burning fossil fuels to power lifestyles.

Another example is the problem of entropy of recycling materials. When recycled, most wastes come out of the end of the process as a lower-level product. Take electronic waste as one example, or paper as another (during recycling the fibres become smaller and so the paper is more fragile).

Circular systems, as used in nature, where there is no waste, need to be devised. If nature provides an example where entropy does not increase, can we apply this to industrial processes and human practices?

Now that would really be something for the Google geniuses who devised the algorithms for Deep Mind and learning artificial intelligence.

Mustafa Suleyman, the co-founder of Deep Mind, is already on record as saying that it may be possible to apply their algorithms to other scenarios.

“There’s lots of other applications outside of Google”.

Really? Life outside Google? You surprise me.

Further reading:

A simple introduction to the subject of entropy, pollution, the economy and human survival is found in this article: Energy consumption and entropy release in the biosphere.

For the brave, a more complex mathematical introduction is available in this academic paper: The Impact of Entropy Production and Emission Mitigation on Economic Growth.

David Thorpe is the author of:

Monday, August 15, 2016

Hydrogen is working and it’s much cheaper than we thought

[This article is republished from The Fifth Estate. Originally published on 9 August.]

The technology that produces hydrogen using renewable electricity has already passed crucial regulatory tests for grid balancing in a commercial environment, despite what I said here a month ago.

For over 30 years the prophets of green energy have been promoting the idea that the “hydrogen age” is just around the corner. The gas is abundant in the form of water, molecules of which possess two hydrogen atoms for every oxygen atom.

Making it from water using electrolysis releases only oxygen and no pollutants. It can then be burnt in any suitable boiler, cooker or vehicle and used in fuel cells. All we have to do is get it to the right place at the right time at the right price.

The problem has always been the right price, which provides the market incentive for investment in the necessary infrastructure.

A month ago I wrote a piece on a proposal to convert the UK’s gas grid to hydrogen. The reports I covered judged that the most likely route to creating the hydrogen was through the steam reforming of methane. This is not a climate friendly way of doing it, although it is currently by far the most common.

In a low carbon future, producing hydrogen this way in the required quantities would be unlikely without the ability to capture the carbon released by this process and store it underground, a relatively unproven and expensive process dubbed Carbon Capture and Storage.

I had compared in my article the cost of steam reforming with CCS with the cost of producing hydrogen by the electrolysis of water using wind or solar power. My source for the latter information was an apparently reliable one: the Energy Institute of University College London, which produced a report in April last year authored by Samuel L Weeks about using hydrogen as a fuel source in internal combustion engines. This states: “Hydrogen produced by electrolysis of water is extremely expensive, around US$1500/kWh [AU$1959/kWh].

The editor of The Ecologist magazine, Oliver Tickell, pulled me up on this, observing that it struck him as being way too expensive. I tried to get Professor Weeks and the UCL Energy Institute to give me the source for the $1500 figure but so far have not had a response.

So instead I turned to a company that is already making hydrogen from renewable electricity for grid balancing and fuel cell powered cars: ITM Power. They provided me with another professor, Marcus Newborough, who is their development director. He gave me a much lower figure.

Much, much lower.

He said: “We are currently selling high purity hydrogen at our refuelling stations for fuel cell cars at £10/kg of hydrogen. Each kilogram contains 39.4kWh of energy, so that’s about 25 pence/kWh or $0.33/kWh. The ambition is to decrease the $/kWh value as more stations are manufactured and more FC cars are in circulation. So yes the $1500/kWh number looks absurd to us.”

Indeed it does. It is 4545 times larger, if we are comparing like with like.

And I apologise for not checking more thoroughly.

And I’m still mighty curious as to why UCL Energy Institute got it so wrong.

Not only is ITM using the gas for hydrogen car filling stations, a chain of which it is opening in the UK (on a full tank of hydrogen a fuel cell car can drive up to 300 miles), it is also using it to inject into the grid.


The process is called power-to-gas (P2G) and it is useful when too much renewable electricity is being produced compared to the demand that exists at that moment. Instead of it going to waste it could be used to produce hydrogen as a form of energy storage and used when required.

Professor Newborough said, “The power-to-gas approach is a form of energy storage and (in the UK) there are various assessments and discussions ongoing [through organisations such as BEIS (the new UK government department dealing with energy and industry), OFGEM (the British energy regulator), UK National Grid, DG Energy in Brussels (the European Commission’s department dealing with energy) and The European Association for Storage of Energy] but no conclusive economic framework yet for energy storage to operate within.”

He said P2G was particularly advantageous for its following abilities:
  • to respond to an instruction from the grid operator to charge up or absorb electricity
  • to hold on to the stored energy for a significant period without incurring energy losses
  • to discharge energy on demand at a desired rate
  • to be scaled up in number or capacity as we head towards a much more renewable electricity system
“P2G is part of this alongside batteries, pumped storage, etcetera,” he said. “Fundamentally the economic benefit is greatest for those technologies that possess the operational advantages of being able to respond very rapidly and/or hold onto the energy for a long period and/or discharge energy at a controllable rate across a very long period. Now power-to-gas is particularly advantageous in each of these respects.”

ITM has a pilot P2G system operational in Frankfurt with 12 other companies that together form the Thüga group.

At the end of 2013, this plant injected hydrogen for the first time into the Frankfurt gas distribution network. It therefore became the first plant to inject electrolytic generated hydrogen into the German gas distribution network, and possibly anywhere in the world. Final acceptance of the plant was achieved at the end of March 2014.

Overall efficiency is said to be over 70 per cent and the plant is now participating in Germany’s secondary control (grid balancing) market.

The conditions for being allowed to do this are extremely stringent. Systems have to respond in under one second when they receive a command to increase to maximum power or decrease to zero power to demonstrate that they are suitable for frequency regulation. The energy is discharged as hydrogen and should be available for as long as required.

The Frankfurt system has been shown to do this and can react to variable loads in the network.

Work is ongoing to see how the plant can be integrated into an increasingly intelligent future energy system.

“For the duration of the demonstration, we want to integrate the plant so that it actively contributes to compensating for the differences between renewable energy generation and power consumption,” Thüga chief executive Michael Riechel said.

The regulatory framework is playing catch-up

Professor Newborough told me that the payment levels for providing such services have yet to emerge.

In the UK, the national grid is introducing an Enhanced Frequency Response service to pay energy storage technology operators to provide sub-second response.

“ITM has already pre-qualified to provide such a service,” he said.

They are also introducing a Demand Turn Up service, which will pay operators £60/MWh (AU$102/MWh) for operating overnight and on summer afternoons to absorb excess wind and solar power.

“Clearly the economics of P2G are a function of such balancing services payments from the grid operator and the electricity tariff,” he said, “but in addition P2G offers a greening agent to the gas grid operator in the form of injecting hydrogen at low concentrations into natural gas.

“So the economics are also a function of the value placed on greening up the gas grid. By analogy we have seen in recent years in France, Germany and the UK, feed-in tariffs for injecting bio-methane into the gas grid as a greening agent and these have been up to four times the value of a kWh of natural gas.

“The economic case therefore depends on a combination of value propositions and costs – providing services to the electricity grid, the electricity tariff paid, the value of green gas for the gas grid and the capital cost of the plant. In this context it is not possible to state firm figures at this time, but equally it is important to state the underpinning factors as described above.”

It was at this point in our conversation that he gave me the price at which the company is currently selling high purity hydrogen at its fuel cell car refuelling stations.

Advantages of hydrogen over batteries

A report on energy storage undertaken by McKinsey and Co last year found that using variable renewable electricity this way could use nearly all excess renewable energy in a scenario in the future in which there was a high installed capacity of renewable electricity generation.

Reusing this stored energy in the gas grid, for transport or in industry, it said, would provide a valuable contribution to decarbonising these sectors. The European potential, in 2050, of this value would be “in the hundreds of gigawatts”.

That’s massive.

This future scenario, in which countries are reliant for much of the electricity on renewables, is likely to be common.

The Kinsey report contrasts the use of hydrogen with the use of batteries, which it calls power-to-power or P2P because it’s electricity rather than gas that comes out.

In this situation hydrogen scores better as a storage medium because batteries can either be emptied (in which case they can’t supply the demand) or full (in which case they can not be charged even if the generator is generating). By contrast, hydrogen can continue to be pumped into the grid or into vehicles and the limiting factor instead is the limit of local demand for the distance to the demand from the generator. This is shown in the following diagram:

Graph: how low energy storage capacity is a limiting factor for the use of batteries.
How low energy storage capacity is a limiting factor for the use of batteries.

Nevertheless the Kinsey report warns that current regulations lag behind the potential of these technologies. Reviewing them is the key to unlocking this enormous opportunity.

So it now seems that the most likely route to creating the hydrogen that goes into our gas grids could be from electrolysis using renewables after all.

Yet, like many cutting-edge low carbon technologies, it’s early days. The Germans are pioneering this method as part of their transition strategy. It’s one part of the picture.

With the UK Met office this week saying that we have already reached 1.38°C temperature rise since the beginning of the industrial revolution and the Paris Agreement aspiring to keeping that rise to 1.5°C, the task of mainstreaming these technologies becomes even more urgent.

David Thorpe is the author of:

Tuesday, August 09, 2016

Appalling energy efficiency results revealed for London’s buildings

The geography of fuel poverty: where you live determines how high your fuel bill is
The geography of fuel poverty: where you live determines how high your fuel bill is.

Despite London’s world-class status, exorbitant property values and all the foreign cash flowing into its property market, over a third of its non-domestic buildings and a quarter of its homes have the lowest energy efficiency ratings.

[NB: This article first appeared on the Fifth Estate website on 3 August]

The revelation comes from a survey of Energy Performance Certificates, the official way of measuring the energy efficiency of buildings in the UK, that have been issued in the last six years, undertaken by the Association for the Conservation of Energy.
The proportion of homes meeting the different levels of energy performance in London.

The proportion of homes meeting the different levels of energy performance in London.
Understanding Energy Performance Certificates
Understanding Energy Performance Certificates

By studying the certificates ACE found that 37 per cent of non-domestic buildings had been rated E or lower since 2009 and only around a third (34 per cent) had performance ratings of C or higher.

In the housing sector, 830,000 were awarded the lowest energy efficiency ratings of E, F or G, with 18,000 homes in the bottom two extremely poor categories.

In the same period, foreign investors have apparently bought £100 billion (AU$175.2b) of London property and London has become the most expensive capital in the world for employers to house their staff.

But none of this cash has “trickled down” to help improve the building stock used by the majority of London’s inhabitants.

Pedro Guertler, the research director at ACE responsible for the study, said: “We were shocked to discover that a quarter of London’s homes and 37 per cent of its workplaces have the very worst energy ratings and therefore waste a large proportion of their energy.

“Millions of the capital’s homes and businesses still stand to gain from energy efficiency upgrades.”

He gave a striking example: “If shops cut energy costs by 20 per cent, it would be the equivalent of a five per cent increase in sales.”

Commercial and industrial buildings make up about a quarter of London’s building space but consume almost half of its energy, resulting in them emitting about 42 per cent of the city’s carbon emissions.

The £7.9 billion fuel bill

London’s homes and workplaces spend upwards of £7.9 billion (AU$13.8b) on energy bills every year, £4 billion (AU$7b) of which is paid by workplaces. This is money that leaves London’s economy. ACE makes the point that, by contrast, improving efficiency and cutting energy costs actually represents an investment in the capital’s economy, as well as improving its energy productivity and competitiveness.

In 2011 London set itself the challenge in its Climate Change and Energy Strategy of reducing carbon dioxide emissions by retrofitting 2.9 million homes and 11 million square metres of floor space in public buildings, plus 44 million sq m of private sector workplaces by 2025.

Much has been done, but not enough.

Since 2005 almost 1.5 million works have been undertaken to improve the energy performance of homes in London with 350,000 lofts insulated and 257,000 cavity walls insulated and 803,000 efficient boilers installed. Some of this has been under the Greater London Authority’s RE:NEW programme, which has been operating since 2009.

There are still 650,000 cavity walls that are unfilled and 674,000 lofts that could be made cosier.

Barriers to retrofit

There are many barriers to this further work. Amongst these, Sadhbh Ní Hógáin, housing retrofit project manager at Haringey Council, cites:

  • the ambiguity of whether you need planning permission for external wall insulation
  • inconsistent energy policy from government
  • communicating the benefits of solid wall insulation and energy efficiency especially in the private rented sector
  • ensuring high standards of installation quality
  • the challenge of delivering carbon saving projects during a period of financial austerity.
Another problem is that many premises were built long before good insulation standards were required, in both the commercial and residential sectors.

The state of London’s building stock is becoming an issue for its new mayor, as the 2011 Climate Change and Energy Strategy requires Sadiq Khan to ensure retrofits are carried out on around two-thirds of London’s current non-domestic buildings over the next decade.

Nevertheless the ACE report claims London is falling well behind on its milestones to 2025 and says that the mayor also has his own targets to deliver – when he was elected this year his manifesto promised to make the capital zero carbon by 2050.

“The mayor has set ambitious climate change and energy targets,” Mr Guertler said. “But we are falling well behind on our milestones to reach them. We are improving homes at half the speed we need to – and public sector buildings aside, nobody at City Hall knows what progress is being made to improve our workplaces.”

There has been some success in the hospital sector. Global Action Plan runs an award-winning behaviour change program called Operation TLC, which helps staff take action to improve conditions in buildings used for healthcare. It has been implemented in six NHS trusts across the UK, half of which were in London, and works by harnessing the positive efforts of staff to give patients the best possible care. So far it has succeeded in reducing NHS electricity bills by over £500,000 a year, out of a total bill of £70 million across the UK.

Also, London’s RE:FIT programme has underpinned £93 million in improving public sector buildings. But besides this, there is little policy in place to address the energy efficiency of non-residential properties.

The policy gap

Legislation is coming into force designed to improve the energy efficiency standards in privately rented buildings. This legislation, called Minimum energy efficiency standards (MEES), will make it unlawful for landlords to grant a new lease for properties that have an EPC rating below E from 1 April 2018.

Apart from this, at present the UK has little in the way of a national policy in place to promote energy efficiency. With the failure of the Green Deal, action to tackle fuel poverty has fallen dramatically since 2012, as this graph shows:
Action to address fuel policy has decreased dramatically.
 Action to address fuel policy has decreased dramatically.

ACE itself has been campaigning for energy efficiency in buildings for decades. It is now asking the new government for seven key policies to be enacted:
  • A new energy policy framework
  • Buildings energy efficiency as infrastructure
  • A leadership role for the public sector
  • Zero carbon new builds
  • Minimum energy efficiency standards for existing buildings
  • Incentives for energy efficiency retrofits
  • Improved access to finance for energy efficiency investments
The government is currently consulting on how to fill the policy gap with respondents having two weeks left to respond. Its only idea is to continue the policy of forcing energy suppliers to upgrade the least energy-efficient homes. But this approach alone doesn’t address the breadth or severity of the problem.

Furthermore, now that the Department of Energy and Climate Change, which instigated the consultation, has been abolished by the new prime minister Theresa May, it is unclear who will even be responsible for driving this policy forward.

For London, at least, Sadiq Khan will have to go it alone.

David Thorpe is the author of:

Monday, August 01, 2016

New European Commission emissions reduction proposals fail to prioritise energy efficiency

[This article originally appeared on 28 July on The Fifth Estate website]

Key new European Commission climate proposals, covering 60 per cent of EU greenhouse gas emissions, fail to match the aspirations of the Paris Agreement to keep global warming well below 2°C, and include astonishing “loopholes”, especially on energy efficiency, analysts say.

This autumn, the European Commission will present an Energy Efficiency Package, including a revision of the Energy Efficiency Directive and Energy Performance of Buildings Directive. The revision aims to implement a non-binding energy efficiency target of 27 per cent by 2030, which the European Commission is considering increasing to 30 per cent.

In addition, the post-2020 reform of the EU Emissions Trading System is being negotiated in the European Parliament, and on 20 July the European Commission published proposals on the Effort Sharing Decision, the idea of which is to distribute climate targets to each Member State in order to decarbonise the sectors not covered by the EU-ETS, which include transport, buildings, agriculture and waste.

The overall target is in keeping with the same 30 per cent reduction on 2005 emissions levels by 2030.

The European Parliament called in October 2014 for a comprehensive cost-benefits analysis of energy efficiency and insisted on a binding energy efficiency target of “at least” 40 per cent by 2030 in order to reach 90-95 per cent reductions by 2050. WWF criticised these targets for being far too weak at the time.

Yet, these new proposals – from the bureaucrats in the Commission – only consider a target of 27 per cent (having in mind an EU level of 30 per cent) for energy efficiency.

They are so weak that six EU member states do not need to cut greenhouse gas emissions from transport, waste, buildings and farming for 15 years. Greece, Hungary, Croatia, Bulgaria, Portugal and Romania were already emitting less than their 2030 allocation in 2014.

The weakness of this ambition has been slammed by the Coalition for Energy Savings.

“Energy efficiency improvements are the key driver of such emission cuts but the link is not made clear,” it says.

The Coalition for Energy Savings secretary general Stefan Scheuer said: “Building national climate targets on the potential for efficiency would secure benefits to all Member States, especially lower-income countries with significant investment gaps.

“The Commission should step up efforts to truly place energy efficiency first in its policymaking, which will benefit citizens directly, through renovating inefficient buildings, replacing wasteful equipment and technologies, updating production facilities and building an efficient and clean mobility system.”

The previous Effort Sharing Decision included an implicit target to reduce greenhouse gas emissions of the building sector. But this was not supported by an EU requirement to set an energy savings target for buildings. This oversight has not been corrected in the new ESR.

Another organisation condemning this oversight is Eurima, which represents insulation manufacturers. It says: “This lack of focus on sectors with high available CO2 potential, namely our existing buildings, is regrettable, especially since there are mature technologies in place to renovate and curb emissions.”

The Commission’s proposals offer Member States the possibility to bank and borrow emission allowances, and loosen the reporting/compliance measures currently in place. A formal compliance check will be organised only every five years, rather than annually.

To meet the Paris Agreement goals, around half of global emissions reduction efforts will have to come from energy efficiency, says Eurima.

“The ESR fails to encourage or provide any incentive to prioritise energy efficiency in facilitating investment in managng energy demand, through a higher energy efficiency target.”

The proposals have been analysed by Sandbag, a UK-based not-for-profit climate policy think tank. Sandbag says” “This proposal … has more loopholes than anyone expected and will not deliver Europe’s contribution to the Paris Agreement.”

Sandbag believes that 50 per cent cuts are achievable and can be delivered cost-effectively. The 30 per cent target implies just a four per cent cut in emissions beyond BAU between 2021-2030 and the sharing proposals “would allow a flood of emission credits from elsewhere to dilute the EU’s climate ambition”.

It has published its own report showing how effort could be shared in a more balanced way. “Wealthier states with higher targets but smaller cost-efficient reduction opportunities could pay countries with lower GDP/capita to cut their ESD emissions exactly where cost is lowest,” it suggests.

The Commission is proposing that the number of carbon emission allowances will decline by 2.2 per cent every year starting from 2021. (Currently there’s a 1.74 per cent annual reduction; Green MPs in the European Parliament demanded a 2.6 per cent decline).

In order to prevent “carbon leakage” – where factories move abroad to escape the restrictions – the Commission wants to see 57 per cent of allowances auctioned and allocate the remaining 43 per cent given away free.

Eastern European countries like high coal-burning Poland had demanded this in return for agreeing to the EU’s climate targets in the first place.

Germany’s target is a cut of 38 percent and France’s and Britain’s is 37 per cent. Brexit could affect the other countries’ targets, but not by that much by 2030. Poland’s target is just a seven per cent cut.

Poland objected to its target straightaway.

“Poland cannot afford such a big reduction effort,” Pawel Salek, Poland’s deputy environment minister in charge of climate policy, said in an email.

But European Commission Vice-President Maros Sefcovic told Reuters that “all member states understand very well that if you want to alleviate the burden on one country, then someone else will have to carry it”.

Imke Lübbeke, head of climate and energy at the WWF European Policy Office, said: “It seems baffling that the Commission can so quickly ignore the Paris Agreement and its temperature goals, especially since Climate Commissioner Arias Cañete has been openly endorsing 1.5°C as the temperature threshold to aim for.”

Yet this bickering about responsibility amongst nations is the reason for the low ambition of these proposals.

“Europeans want climate action: it is now up to their political representatives, MEPs and Member States to put the “effort” back into Effort Sharing Decision by closing the loopholes and introducing a five-yearly review that increases ambition over time, in line with Paris,”, Lübbeke said.

Europeans may want climate action, but clearly those lobbying the EC do not.

You can watch Cañete announce the proposals here:

David Thorpe is the author of:

Monday, July 18, 2016

Could the UK's gas grid be converted to hydrogen?

[NOTE: An earlier version of this piece appeared on 13 July on The Fifth Estate. This version has been updated.]

A new study claims converting the UK gas grid to carry hydrogen instead of natural gas will help to meet the UK’s carbon reduction targets and is technically feasible without much disruption to consumers. It proposes Leeds as a pilot city, but there are still major problems to be overcome before it can go ahead.

The proposal is called the H21 Leeds City Gate and the report has been produced by the North of England’s gas distributor, Northern Gas Networks, which is clearly worried by what could happen to its assets down the line, as the country reduces its greenhouse gas emissions by 80 per cent of 1990 values by 2050, which is the target.

It commissioned Kiwa Gastec, Amec Foster Wheeler, and Wales & West Utilities to assess the prospects for converting the gas network to take hydrogen instead of natural gas for cooking in heating, beginning in Leeds and eventually covering the entire UK.

The study is backed by no less than four other recent reports, all making the case for using the existing gas grid, which serves almost half the UK population, for either biogas or hydrogen or a combination.
A UK-wide conversion of the grid to hydrogen gas could, it’s claimed by H21, reduce greenhouse gas emissions associated with domestic heating and cooking – currently over 30 per cent of the UK’s total emissions – by a minimum of 73 per cent, as well as supporting decarbonisation of transport and local electricity generation.

The report argues that a hydrogen gas grid could use the existing underground natural gas pipe network, and that household appliances can be converted to run on hydrogen with far less disruption and expense than converting to renewable energy sources.

Dan Sadler, H21 project manager at Northern Gas Networks, said: “Households won’t be required to buy new appliances. The conversion process will be similar to that carried out in the 1960s and ’70s when 40 million appliances across 14 million households were converted from town gas to natural gas. We’d have special teams, working street by street to make the conversion as smooth as possible for customers with minimal impact in the homes and the highways.”

H21 says the project would be funded the same way as happened during that first conversion. This would allow the costs to be paid back over time and, alongside energy efficiency measures, would have a minimal impact on household energy bills.

Household appliances will, however, need to be upgraded or modified.

Pure hydrogen embrittles many pipeline steels causing cracking and many pipes are made of iron, but they are slowly being changed to polypropylene at a cost of around £1 billion (AU$1.75b) a year. This cost is spread across consumer bills.

NGN is proposing that Leeds, the UK’s third largest city, is used as a prototype test bed, and the conversion would take place from 2026-29. If successful, there would be a rollout across the UK, implemented at the pace required.

The government has cautiously welcomed the report as a contribution to the debate on Britain’s energy future.

John Loughhead, the chief scientific adviser at the Department for Energy and Climate Change, said: “Meeting the challenge of the Climate Change Act is a huge technical and business challenge. The H21 Leeds City Gate project has usefully explored one possible contribution to meeting this challenge. DECC, and wider UK government, are looking forward to seeing the full findings of the project in the final report.”

The Leeds proposal has received backing from local authorities and businesses including Leeds City Council, the Leeds City Region LEP and Tees Valley Unlimited LEP.

Councillor Lucinda Yeadon, Leeds City Council’s executive member for environment and sustainability, said: “Transforming Leeds into a hydrogen city would be a bold step. It could play a crucial role in how we heat and power our homes in the future alongside other sustainable energy sources.”

NGN is asking for £70-100 million to take the project to the next stage.

Big hurdles

There are several problems with NGN’s proposal besides replacing the pipes, to do with the energy content of hydrogen, and the process of obtaining it.

NGN is proposing the hydrogen be derived from North Sea natural gas with the carbon dioxide removed and placed securely back under the sea so that it doesn’t contribute to global warming.

But at present there is no proof this can work or will be cost-effective. 

Let’s look at this a little more closely.

Most hydrogen in the lithosphere is bonded to oxygen in water. Over 90 per cent of today’s hydrogen is mainly produced by a process called steam reforming, which uses fossil fuels – natural gas, oil or coal – as a source of the hydrogen. The carbon dioxide is removed and vented to the atmosphere.

Hydrogen produced from gas this way is two to three times the cost of the original fuel.

Of course, the energy content of hydrogen is less than that of the original fuel. The claimed energy efficiency for natural gas reforming is 75 per cent. Furthermore, by weight, a unit of hydrogen contains around three times more energy than natural gas or petrol:

  • Hydrogen: 33.33 kWh/kg
  • Natural gas: (82-93 per cent methane): 10.6-13.1 kWh/kg
  • Petrol: 12.0 kWh/kg
  • Methane: 13.9 kWh/kg
But natural gas is 7.857 times more dense than hydrogen, and we buy it by volume. Since natural gas carries 41.7 per cent less energy per unit of weight, you’d need to pipe to people’s homes just over three times as much volume of uncompressed hydrogen for them to get the same amount of energy, so the pipes will be under greater pressure to compensate.

Then there’s the climate change problem. The global warming potential of producing hydrogen using the steam reforming process is 13.7kg CO2-e per kg of hydrogen produced. Coal gasification, another major production method, delivers even worse emission levels.

A typical steam methane reforming hydrogen plant with a production rate of one million cubic metres of hydrogen a day produces 0.3-0.4 million standard cubic meters of CO2 a day, which is normally vented into the atmosphere.

To fully attain the benefits of using hydrogen, we must therefore either produce it from renewable energy – or capture and store somewhere the carbon dioxide removed during steam reforming – a process called carbon capture and storage. H21 is proposing the latter.

The renewables option

There are at least eight sustainable ways of producing hydrogen. Electrolysis of water is the cheapest but currently is much more expensive, around US$1500/kWh.

A comparison of photoelectrochemical (PEC) and photovoltaic-electrolytic (PV-E) ways of producing hydrogen with low CO2 and CO2-neutral energy sources indicated that base-case PEC hydrogen is not currently cost-competitive with electrolysis using electricity supplied by nuclear power or from fossil-fuels in conjunction with carbon capture and storage.

They are currently an order of magnitude greater in cost than electricity prices with no clear economic advantage to hydrogen storage as of yet.

A number of possibly cheaper technical breakthroughs are in the wings but we don’t yet know if and when they will be commercially viable.

Analysts at the US National Renewable Energy Laboratory who have looked into the feasibility of hydrogen, assume that 53kWh are required for an electrolyser to produce a kilogram of hydrogen (remember that’s 33kWh when converted), so we’d need a lot of renewable energy to create all the hydrogen to feed the grid.

It might just be more effective to send the electricity straight there and use it directly for heating and cooking.

The CCS option

The H21 proposal has been welcomed by Scottish Carbon Capture & Storage, a research partnership that includes the British Geological Survey, whose director, Stuart Haszeldine, called steam reforming with carbon capture and storage “the least cost method of generating the large amounts of hydrogen required”.

So he is right. Except that no one knows how much it will cost.

The H21 report points towards the very few existing CCS projects in the US and elsewhere – but these operate under very different conditions.

Ever since CCS was first proposed over 15 years ago, I have been sceptical that it could work. It has always been seen as a get-out-of-jail card to permit business as usual in terms of fossil fuels and energy use while seeming to tackle climate change.

Every single deadline and target to get economically viable demonstration and proof-of-concept projects off the ground has been missed in Europe.

This crucial hurdle needs to be overcome – perhaps by backing a completely different and sustainable route to making the hydrogen, or by using the carbon dioxide removed as a feedstock for fuels, chemistry and polymers.

This is called Carbon Storage and Utilisation (CCU).

CCU for the production of fuels, chemicals and materials has emerged as a possible complementary alternative to CO2 storage, but the report does not mention it. Nor do the two other reports on adapting the gas network produced last week.

"CCS is basically a non-profit technology, where every step is costly. CCU however has the potential to produce value-added products that have a market and can generate a profit." says Dr Lothar Mennicken, German Federal Ministry of Education and Research.

The report CCU in the Green Economy from The Centre for Low Carbon Futures shows CCU can be profitable with short payback times on investment.

It says: "Although only a partial solution to the CO2 problem, under some conditions using CO2 for CCU rather than storing it underground can add value as well as offsetting some of the CCS costs."

But what are the life-cycle carbon emissions of hydrogen production using SMR plus CCS/CCU?

The latest UK government estimated LCA CO2 emission figures for NG combustion are 184.45 g/kWh plus 24.83 g/kWh emitted by the supply system, totalling 209.28 g/kWh.

But this depends on the gas source: e.g., liquefying natural gas in Qatar, transporting it in refrigerated ships, transporting it in special depots, reclassifying and compressing it into the transmission system can add around another 20 g/kWh, totalling 230 g/kWh.

The carbon footprint of SMR+CCS has been evaluated as 269 g/kWh using the lowest 184.45g/kWh figure above and assuming an efficiency for the process of 68.4%. But applying this to the more accurate lifecycle figure for NG of 230 g/kWh obtains 336.26 g/kWh.

If 90% of the carbon dioxide emitted by combustion is captured by CCS or CCU this still leaves [184.45/0.687] x 0.1 + 20 + 24.83 g/kWh = 71.68g/kWh emissions of carbon dioxide equivalent gases – a not insignificant amount.

H21Leeds puts the figure higher, at 85.83g/kWh. Hardly zero carbon – so H2 generation by renewable energy + electrolysis might be a necessary option in the future.

So, for the time being H21 is an interesting dream – but we must wait to see if it can become a reality.

David Thorpe is the author of:

Monday, July 11, 2016

UK energy and environment sectors face post-Brexit uncertainty

[note: Originally published in The Fifth Estate, on 28.6.16.]

The UK energy market and the prospects for environmental safeguards face an uncertain future following the country’s referendum vote to leave the European Union.

One-fifth of British business leaders said they were considering moving operations abroad after the vote, according to a survey by the Institute of Directors. One in four also planned to freeze recruitment and over a third said it would cause them to cut investment.

Immediately following the announcement of the result, Greenpeace UK executive director John Sauven commented: “Many of the laws that make our drinking and bathing water safe, our air cleaner, our fishing industry more sustainable and our climate safer now hang by a thread… The climate change-denying wing of the Conservative Party will be strengthened by this vote.”

Jacob Hayler, the executive director of the Environmental Services Association, which represents the UK’s resource and waste management industry, also voiced the opinion that the result would “extend and intensify the uncertainty around both our industry and the UK more generally”.

“The danger now is that the waste and recycling sector is placed at the bottom of the government’s in-tray.”

He promised to “make the case for the circular economy within the UK”.

The effects on investment prospects are likely to be negative for these sectors. Last year the National Grid commissioned research from Vivid Economics on the impact of Brexit on the British energy sector, which concluded that investment costs would increase due to the “uncertainty arising from Brexit negotiations” at a time when the country is “undertaking a historic level of investment in energy infrastructure”.

This view was echoed following the announcement by Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, who said that energy companies could be most exposed to the effects of a Brexit. Plans for capital intensive projects such as offshore wind and new nuclear power stations are particularly vulnerable.

Although EDF chief executive Jean-Bernard Lévy said the UK’s decision would have no impact on EDF Energy’s strategy to build Hinkley Point C – the first new nuclear power station built in the UK in almost 20 years – this was contradicted by Fiona Reilly, PwC’s global head of nuclear capital projects and infrastructure. She said the decision to leave the EU “could have a significant impact on our nuclear program”, citing “access to capital and investor confidence”, but also the need to “renegotiate our involvement in the Euratom Treaty and our 123 Agreement with the US”.

Jonathan Grant, director of PwC sustainability and climate change, called the result “a major setback for the type of collaboration needed to tackle global environmental issues like climate change”, and said “there is a risk that it could kick EU ratification of the Paris Agreement into the long grass”.

Professor Steve Cowley, chief executive of the UK Atomic Energy Authority, the country’s nuclear research agency, told the BBC that over 1000 clean energy exploration jobs may be lost. Scientific research benefits greatly from EU partnerships and funding. Researchers are afraid, he said, that £55 million (AU$99m) in annual European Commission funding would be withdrawn.

While the decision to leave will not affect the UK’s climate change goals, as they are enshrined in law at a national level under the Climate Change Act 1998, there will still be implications. The UK’s own emissions will have to be deducted from the EU’s, which count together under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement.

The deduction could impair the EU’s perceived performance since, as the UK is a relatively high performer, it helps to counteract the lesser performance of other member states. The UK will also have to submit its own Nationally Determined Contribution to the UNFCCC process, since at present all member states are covered by a single document.

Christiana Figueres, before the vote, had already said that a pro-Brexit result would mean the Paris Agreement “would require recalibration”. Following the vote, Ian Duncan, the only Conservative MEP for Scotland and the British lead MEP on the bill to revise the Emissions Trading System, resigned. In his letter he said: “It is with quite some regret that I take this step. I believe passionately in the need to address climate change.”

Whether the UK will continue to participate in the EU Emissions Trading Scheme is uncertain. European carbon prices fell over 15 per cent following the Brexit vote. If negotiations result in Britain adopting the EEA + EFTA model, then, like Norway, Lichtenstein and Iceland, it will do so. Otherwise, arrangements will have to be made to compensate those companies which hold a surplus of emission allowances under the cap and trade scheme.

Also, the country will be free of the targets set by the EU Renewable Energy Directive and the restrictions under EU state aid, which could free the government to curtail renewable energy support regimes, as long as it still kept within the Climate Change Act’s restrictions. Many right-wing politicians would like to see this Act withdrawn, however.

But any subsidies must still comply with the World Trade Organisation’s subsidy regime – which arises from the same principles as EU State aid rules.

It’s unlikely that Brexit will reprieve the death sentence hanging over the UK coal-fired power stations and many older gas plants. The law stipulating that their greenhouse gas emissions are too high to permit them to continue was the EU Industrial Emissions Directive 2010, which passed into national law. The UK Government is anyway proposing (subject to consultation) to close all unabated coal-fired power stations by 2025.

A particular area of concern is the future of Europe’s ambitious plan to liberalise and harmonise its energy market and grids, known as Energy Union. The UK Government has always pushed the European market to be more liberal. Regardless of Brexit, cooperation with the EU internal energy market will still be necessary because of the electricity interconnectors and gas flows between the British Isles and the continent.

So whatever rules the EU opts for in the Energy Union market will have to be complied with by the UK without it having been able to participate in their formulation – unless the UK succeeds in negotiating to remain a member of the bodies that write the rules, such as ACER, ENTSO-E and ENTSO-G.

Karel Beckman, editor-in-chief of Energy Post, commented that policymakers in Brussels should reconsider the Energy Union and opt “for more realistic forms of market integration”.

Energy and the environment hardly figured in the public debates during the referendum campaign. But the vote’s legacy could have a much greater impact on both.

David Thorpe is the author of:

Politicians strive to reassure infrastructure investors following Brexit vote

[note: Originally published on The Fifth Estate, on 5.7.16.]

The outlook for investment in housing, infrastructure and green energy projects in the UK remains uncertain following the referendum decision to leave the European Union, but politicians are now seeking to reassure industry and investors.

Over double the number of industry professionals (60 per cent vs 28 per cent) believe that Brexit will have a negative rather than positive long-term effect on the UK construction industry, with 12 per cent unsure, in an ongoing online poll among those in the UK building industry.

But looking closer, the picture becomes different for different sub-sectors and projects, with infrastructure projects, housing projects and green energy projects each facing differing challenges following the vote.


The UK has plans for several big infrastructure projects, not least HS2 – a new high-speed rail link from London to the north – and Hinkley C nuclear power station, plus a number of offshore wind farms, Crossrail 2, numerous housing projects and the so-called “northern powerhouse” – a plan to rebalance the economy of Britain by investing in the North of England.

If any projects are to fall by the wayside they are likely to be HS2 and the expansion of Heathrow airport, both of which require substantial amounts of public money. Hinkley is also in serious doubt, but for quite a few additional reasons, not least the precarious nature of energy company EDF’s status and uncertainty about the technology chosen for the reactor.

Also at risk are smaller regeneration infrastructure projects (often road improvements) in England worth in total about £5.3 billion (AU$9.3b), according to the Local Government Association.

In Wales, which, unlike Scotland, London, Northern Ireland and Gibraltar, did vote Leave, the future of the £500 million (AU$882m) annual grant Wales receives from the EU is in doubt.

Welsh government’s first minister Carwyn Jones, calling Leave campaigners “clueless”, says major projects are “in difficulty” because of the Brexit vote, and there are “hundreds of vital EU-funded projects right across Wales whose future is now in the balance”. Funding had been allocated to improve main roads and build the South Wales Metro rail link, a project with a £2 billion (AU$3.5b) price tag that would have received £150 million (AU$265m) from the EU.

House building

Housebuilders suffered a big drop in share prices – an average of 18 per cent – following the referendum result, but there has been some recovery since then. Tony Williams, an analyst at Building Value, says he still expects a slowdown in building, but the underlying momentum will still be strong because of the chronic under-supply of homes in the UK. The devaluation of the pound could actually attract foreign buyers to buy bargain property, particularly in London.

As to how sustainable these homes of the future will be, UK Green Building Council policy adviser Richard Twinn pointed to the fact there is nothing in UK legislation saying it has to meet a sustainability target, except for a requirement in the Housing and Planning Act for the secretary of state to “undertake a review” of energy efficiency measures, with no actual action required by UK law.

The UK’s chief energy efficiency policy is derived from the EU’s Energy Performance of Buildings Directive, which requires all new buildings to be nearly zero-energy buildings from 2021, and may now be scrapped.

Other environmental protections at risk that derive from important European Directives protect birds and natural habitats. Developers have often found these a hindrance, but any attempt to roll back such protection will prompt vociferous opposition from environmentalists.

Green energy

The UK green energy sector last year had a market value of £16b (AU$28b) and employed around 117,000 people, according to the Renewable Energy Association. So far, no projects have been cancelled, and the sector is cautiously optimistic.

Marianne Wiinholt, chief financial officer for Denmark’s Dong Energy, which is building some of the UK’s largest offshore wind farms, says the UK’s energy policy is based on the need to replace old coal-fired power stations. She says any subsidies the UK government disburses to assist the construction of offshore wind farms are enshrined in private contracts “and will thus not be affected by the outcome of the EU vote”.

Many turbine blades for North Sea wind farms are made in Hull, on the north-east coast of England. These factories are not currently under threat, at least in the short term, says factory owner Siemens. Most of these big companies have hedging plans in place to cosset them from currency fluctuations.

Terri Wills, chief executive of the World Green Building Council, says that because the economic and environmental case for tackling climate change has in many ways already been won amongst policymakers, Brexit will make little difference.

“There is a sense that the green agenda is good for business, good for retaining amazing staff, good for us being strong corporate citizens looking to the long term and good for making sure corporations are resilient. So there is a business case for this. I think the market just wants to see that the government recognises that.”

The government has gone some way towards providing this recognition by last week adopting the 2050 emissions reduction target recommended by the Committee on Climate Change and agreeing with its damning report on its own progress, showing that it continues to be committed to the UK’s Climate Change Act and remain a leader on climate action.

Confidence building

Politicians have, in the last few days, been taking other steps to rebuild confidence in British investment plans.

Government infrastructure commissioner Sadie Morgan attempted to calm fears by saying she has “every confidence” projects will go ahead – because infrastructure spending is critical to lifting the country out of the Brexit crisis.

“As far as the [National Infrastructure Commission] is concerned, it’s business as usual,” she told a House of Commons reception for the construction industry.

“If anything is going to get us out of this hole it’s infrastructure.”

MP Conor McGinn, chair of the All Party Parliamentary Group on Construction and Urban Development, told those at the gathering that the country was entering “really challenging and unprecedented times” so it was crucial for the government to “work in partnership” with construction firms to overcome the challenges.

Chancellor George Osborne on Monday set out a five-point plan that includes a proposal to set the level of corporation tax at under 15 per cent – the lowest of any major economy – to stimulate investment including in the north of England. The decision to leave the EU potentially threatens the UK’s relationship with China, which Osborne had been at pains to build in order to attract inward investment. Osborne has said he will reassure China and other countries that Britain is still open for business.

He will be encouraged by a bounce back in the value of the top British shares index on Monday, led by mining stocks, and with the blue-chip FTSE 100 index at its highest level since August 2015, following a slump after the referendum result. The Sterling’s weakness since then has, reports, provided a cushion to the FTSE 100, “since many of the index’s international companies can benefit from a weaker pound which would help exports”.

Finally, one of the contenders for the leader of the Conservative Party, Stephen Crabb, has proposed a £100bn “Growing Britain Fund”. This would use government borrowing to fund infrastructure investment and invest in projects such as flood defences, a national fibre-optic broadband network, Crossrail 2, social housing, school buildings and new prisons.

European reaction

Further afield, the inward looking referendum result has jolted confidence around the world in the values formerly associated with not only Britain but the whole of the EU: pluralism, non-discrimination, tolerance, justice, solidarity, equality and a commitment to sustainable development and poverty eradication globally.

EU leaders who gathered in Brussels for a crisis summit last week were almost unanimous in their opinions about how the EU needs to change as a result. There can no longer be ‘business as usual”, they said. “Europe needs change.”

“Nothing would be worse than the status quo.”

But there has been no sign yet of these feelings being translated into action. The first post-Brexit vote decision made in Brussels was to bow to corporate lobbying and extend the licence of the controversial toxic herbicide glyphosate for another 18 months. This “shows the executive is failing to learn the clear lesson that the EU needs to finally start listening to its citizens again,” said Bart Staes, a Belgian Green MEP.

This was a view even felt by the Commission itself, and is a result of the complex, often remote and unaccountable way in which decisions can be made at the European level.

Until this changes, the public in many other member countries will continue to demand their own referendum, like Britain’s, putting the European project, which has brought peace, stability and prosperity to the continent for the last 50 years, under threat.

All in all, it seems that investors are going to have to live with uncertainty for some time to come.

David Thorpe is the author of: