Monthly Archives: July 2017

Can Companies Change?

Race Bank_ First Blades

The first wind turbine blades leave Siemens Hull factory for DONG’s Race Bank Offshore Wind Farm

A few days ago I posted a blog about the Norwegian oil company Statoil developing and deploying the world’s first commercial scale floating wind turbines. Statoil is changing its business model. Climate change, ocean acidification, air and water pollution are all largely driven by humanity’s addiction to fossil fuels. Technological innovation and falling prices have made the case to switch from fossil fuels to renewables an economically smart move, as well as being a macro ecological imperative and an absolute necessity for humanity to continue to flourish. The cleantech revolution is happening and is being driven mainly by small start-up companies. What future do the big incumbents have? Will they change with the times or struggle to keep the old polluting economy going? Peabody and DONG provide the most extreme examples of this choice.

The name DONG stands for Danish Oil and Gas. In 1972 it was set up by the Danish government to develop North Sea oil and gas fields. It expanded into electricity supply and owned coal fired power stations. Fossil fuels were its core business. As it has grown it has transformed itself into a cleantech pioneer. It is now the world’s largest builder and owner of offshore wind farms. 80% of its capital is employed in the wind sector and just 4% in oil and gas, and it has said it will sell off this vestigial side of the business while investing heavily in more offshore wind. Last week the first wind turbine blades left Siemens new Hull factory for DONG’s Race Bank Offshore Wind Farm. DONG has also invested in the Cambeltown wind tower factory in western Scotland, owned by Korean company CS Wind. DONG is also now developing some interesting waste to energy projects such as the REnescience project at Northwich, Cheshire. It is creating lots of useful jobs helping develop the technologies that will help combat climate change.

Peabody is a much older company, founded in 1883 in Chicago, USA. It was and remains focused overwhelmingly on coal. To quote Wikipedia ‘Peabody has been an important actor in organized climate change denial.’ It has totally failed to make the transition to a cleantech future. It filed for Chapter 11 Bankruptcy in April 2016. The day after the election of Donald Trump its shares shot up by 50% and in April 2017 it emerged from bankruptcy. It still owns vast coal reserves. If this coal is ever going to be exploited then Peabody has economic value, but if, as climate change and the cleantech revolution show, these assets are just worthless liabilities then a return to bankruptcy seems inevitable.

Most of the world’s huge oil companies, such as Exxon, Chevron, BP and Shell, are still dominated by their oil interests. Most of them have dabbled in renewables but their main capital resources are still overwhelmingly in oil. Will they make the change and fully commit to the post fossil fuel future or will they cleave to the old polluting past? My hunch is that most of them have left it too late: cleantech start-ups will grow exponentially and squeeze them out of the energy market. Their stock market values are likely to plummet as the realization that the reserves they own and that underpin their stock market valuations are worthless. Oil and coal will follow flint from being key economic assets to interesting geological curiosities. When in 1991 the first offshore wind farm opened at Vindeby in Denmark many in the global energy industry thought offshore wind a ludicrous idea. Nobody would say that now. A lot has changed in the last 26 years: much more will do so in the next quarter century as the pace of change inevitably quickens.

Floating wind

Hywind

Two of the five floating wind turbines, in Norway, before being floated to Scotland

This summer marks a new era in wind power. The world’s first commercial scale floating offshore wind farm is taking shape off Peterhead in Scotland. The Hywind project is just 30MW, so small for a commercial wind farm, but groundbreaking in that the turbines are floating rather than standing on the seafloor. This is hugely significant. Offshore wind has so far been restricted to shallow continental shelf areas such as the North Sea. Many areas of the world wish to develop more diverse renewable energy portfolios but do not have much in the way of suitable shallow waters. Japan and Korea, California and Hawaii, France and many other countries look set to develop floating offshore wind systems over the next decade or so. Currently the cost is higher than for traditional offshore wind, but it is projected to fall as systems are scaled up.

Norwegian oil and gas company Statoil has designed and built the system, using five Siemens 6MW turbines, and a range of other companies for various parts of the supply chain. The towers will have a total height of 258 metres, 178 metres above water and 80 metres below. The base will be filled with iron ore to give ballast and be tethered to the seabed. The turbines are assembled on the Norwegian fjord of Stord and floated in their vertical state across the North Sea. This allows very fast deployment, about seven weeks for the whole wind farm. As things are scaled up this will become a very important area of cost saving. Compare this to the decade or so involved to build a typical nuclear power station. The Hywind project is 75% owned by Stadoil and 25% by Masdar. Stadoil refer to this as a pilot project. If it works well in the testing conditions off North East Scotland global orders will come in, which will trigger falling costs and more orders. I think it likely that very large floating windfarms in the deep water off Japan, Korea, California and the Breton coast of France will be built over the next decade. Will it be Stadoil who builds them or will rival firms emerge with better and cheaper designs?

Population

Today, 11th July, is the UN World Population Day. There are now nearly 7.6 billion of us, and the predictions are that by 2050 there will be 9.5 billion, and 11.2 billion by 2100. Global fertility rates are falling, but still we have an extra 83 million people to feed, house and cloth each year. Africa has the fastest rate of growth and Europe the slowest.

There have been many predictions of imminent famine and collapse due to overpopulation, as global food production would fail to keep pace with population growth. Also as the world’s poor aspired to rich world lifestyles the total ecological footprint of humanity would become catastrophic. Pollution would become more extreme and resources ever more scarce and the reason for endless wars.

However there is another possibility. Through peaceful cooperation humanity can collectively pioneer a new kind of global economy that rapidly eliminates the hunger and poverty of the world’s poorest people and the excess and waste of the world’s richest people. Together we as a species have the opportunity to work out sustainable solutions to all our problems, to restore biodiversity while feeding clothing and housing our growing population in ways that are socially just and ecologically sustainable. I’m sure it can be done, at least theoretically. To make it a reality will require the almost infinite creativity and capacity to cooperate that our species is capable of. I meet a growing number of people who are keen to play their part in this great transformation of the global economy. As Buckminster Fuller said back in the 1960’s ‘We are called to be architects of the future, not its victims’.

“Can we feed 9 billion people, sustainably?” is the title of a talk I’m giving tomorrow evening at De Koffie Pot, and was the theme of last week’s blog.

Seed Festival

Seed Festival

The Seed Festival will be taking place at Hawkwood Collage, near Stroud, this weekend. The line up of speakers is terrific, including Caroline Lucas, Molly Scott Cato and Rob Hopkins, all of whom I’ve heard before and am keen to hear again, and also lots of not so well known names speaking on a great range of interesting themes. I’m on a Choices Panel with Louise Davies of the Vegan Society and Ed Downing. There will be varied other activities and music amid a lovely setting. Tickets are still on sale, so if you’re looking for something inspiring, with lots of positive solution focused thinking, do come and join us!