Heat, risk, business, politics and sustainability
I spent a remarkable amount of time yesterday talking about district heating and combined heat and power (CHP) – with students in the morning and the Council in the afternoon (with my political hat on).
This is one issue that I am very passionate about but very frustrated about. Why on earth do we in the UK burn fossil fuels to make electricity but then chuck away the majority of the thermal energy produced – and then burn more gas to heat buildings? It is madness – and the fact that many of our European cousins do it as a matter of course suggest that it is a attitude problem rather than being a technical or economic one.
A number of times in my career I have tried to push such heating schemes but I have consistently come up against people in positions of power who pay a bit of lip service to the idea and then skilfully back heel the ball into the long grass. I have seen others suffer the same fate, so it’s not just my lack of persuasion skills.
The one new UK system which bucks the trend is in Birmingham. The owner, Utilicom, asked the Council to sign up to a long term electricity and heat contract pegged below market rates. That was it.
Utilicom de-risked and incentivised the project for the local authority (traditionally risk averse) and gave itself the financial confidence to get on with it, installing the distribution pipes and signing up customers. Everybody seems very happy about it and carbon emissions fall – a nice example of what Umair Haque calls ‘thick value’, economic value with net social and environmental benefits.
Coincidentally, DECC published a raft of analysis on district heating yesterday. This confirms that, as in the Birmingham example, the private sector sees less risk in district heating than the public sector. This throws the traditional green shibboleth of “business = bad” on its head. Change means risk and risk simply isn’t rewarded in the public sector the way it is in business, so projects wither on the vine.
I am one of a growing number of people who believe that only business can embrace that risk and deliver sustainability for us. The state’s most powerful contribution in many situations is to incentivise ‘good’ behaviour, penalise ‘bad’ behaviour and let the market deliver it in the most efficient way. That will be heresy for many, but it is about time we gave up on politics and embraced pragmatism.