With unprecedented energy price hikes upon us, a COP27 summit that has been followed by tacit admissions we will miss our 2050 net zero carbon targets, and a new UK Prime Minister who could perhaps best be described as “neutral” on green issues, 2023 looks to be a year of challenges – both for those trying to run homes and businesses, and those championing a greener, more sustainable approach to doing so.
Here’s our view on some of the obstacles we’ve encountered in 2022, and those that, together with a sprinkling of opportunities, stand before us - as a company, as a country, and as a planet - in 2023.
2022: a year of challenges for our customers and our industry
Without doubt, the war in Ukraine and the rocketing of energy prices to 400% or 500% what they were before has hit both bottom lines and domestic budgets hard.
This is particularly true in terms of gas use. Many of our customers have had to wake up to the fact that a lot of their processes that use gas have now become prohibitively expensive, and one of the greatest challenges for 2023 will be how exactly they deal with this.
Do they rework the processes to make them more gas-efficient? Do they keep the same processes but connect them to more efficient energy sources? Or will they have to scrap the processes and adopt new ones from scratch?
All these options have a more or less significant impact on business continuity, and they’ll be a major concern for many of our customers and for our industry heading into next year.
Will COP27 make a difference in 2023?
One of the initiatives many in the industry feted to both elevate the public profile of sustainability and encourage better financial support for it was COP27.
However, we hoped rather more commitment would come out of the summit than actually did, particularly with regard to support for greener energy technologies (we discuss this in a little more detail below).
In fact, in the wake of COP27, what has happened is that it seems now to be accepted, as we mention above, that the 2050 target for net zero carbon emissions won’t be met anyway.
Does this spell green meltdown? We don’t think so. Realistically, countries – including our own– now have many more things to worry about in the short-term, so the sustainability agenda has undeniably taken a temporary knock back.
But the prediction for 2023 and beyond is that the cost of energy will continue to rise, and that countries will therefore have to initiate a massive drive to encourage people to physically use less of it – and that, of course, will also reduce emissions.
In short, we think we’re going to see a change in mindset that will mean people think twice before turning up the thermostat, leaving a light on, or going out in the car.
Buildings: what part will they play?
Heating homes, offices, and other buildings, and supplying them with hot water, plays a massive part in carbon emissions (it generates about 40% of them), so how energy-efficiently those buildings perform will be absolutely critical to sustainability in 2023 and beyond.
Insulation is key, as are more efficient energy technologies. Air source heat pumps, for example, are now up to 500% more efficient than gas boilers, and typically last twice as long, as we explored in another article recently.
Photo-voltaic(PV) solar panels, for their part, can now generate up to 25% more energy than previous models, and pay back far quicker.
However, technology can’t solve the entire problem on its own. Once again, lifestyle and attitude changes – getting used to having and using less hot water, for example – will become ever more important in 2023 as we continue to combat the unholy trinity of costs, emissions, and climate change.
Should the Government do more to help businesses go green in 2023?
There can be no denying that the Government has got its hands full balancing the books at the moment, as the financial consequences of dealing with the Covid pandemic come home to roost, inflation multiplies, and unpopular tax rises loom.
Nonetheless, our view is that the Government could and should be doing more to support businesses in their efforts to go green in 2023.
In particular, we would like to see increased Government grants and funding for greener energy technologies (an extension to grants for air source heat pumps is just one example),but the recent disruption to the Government’s leadership and the arrival of aPrime Minister with a less than pronounced green agenda currently makes this unlikely.
However, as in all tricky negotiations, carrot and stick can be an effective approach, and the fact of the matter is that if the Government wants to maximise its carbon reduction efforts in order to minimise the impact of missing the 2050 target, it needs to help businesses do their bit!
Will wind farms finally pay their way?
Whilst we’re on the topic of cash, it’s worth looking at how the green agenda can sometimes be used to divert attention from financial realities that are less than edifying.
Wind farms, for example, are a more sustainable form of energy generation than burning fossil fuels, but the truth of the matter is that energy companies are now making arguably excessive profits from them – quite possibly as excessive as the profits they are making from traditional fossil fuels, in fact. So, in our view, they should be paying higher taxes on both.
The arithmetic is complex, not least because traditional energy forms and energy from wind farms are not taxed in the same way. But ultimately, we see a future where both types of energy could be taxed at around 80% - probably in the form of a windfall tax rather than a long-term rate change.
That’s a big number, but based on the huge sums involved it would also still enable energy firms to deliver significant value back to shareholders, whilst also enabling theGovernment to subsidise, going forward, the cost of energy for the many businesses and consumers who are struggling to pay for it.
Clearly, higher taxes can be a barrier to investment, but Mr. Sunak has shown he is not averse to them in exceptional circumstances – and there’ll certainly be plenty of those in 2023!
Our advice to customers in 2023
Energy-efficient building design and technology is a big part of our offering to our customers, but even the most energy-efficient environment can benefit further from an energy-aware mindset (this point’s just not going away, is it?)
So, we would certainly advise you to pay close attention to your energy bills to work out what’s consuming most, when, and how that consumption could be reduced by, for example, driving change in your staff behaviours and routines.
Installing smart meters is a great way to validate these changes, by helping to you monitor and control energy use in real time, and if all this seems a little draconian, it’s what we do in our office – down to the level of never leaving a light switch on unnecessarily – and it’s been very well received.
We’d also recommend that you consider having PV panels installed on the roof of your business (and house) if you’re able.
In essence, this is all about optimising the performance of the building you’ve got with the least possible energy you can put into it.
And if every business and home in the country took that to heart in 2023, we’d all be in a much better place.
Happy 2023 to you all!
Get in touch today to find out how we can help deliver a leaner, greener future for your buildings and your business.