Stephen Palmer, MWH

Text-only Preview

Leeds UniversityCfon lfluence: 10th10 Mharc 2010Energy and the Water Cycle: Carbon Emiissfons rom thth We ta er IndustryStrategic Investment towards 2050 Dr Steve Palmer and Adrian JohnsonPresentation outline• Current and future risks facing the water industry• The need  to shift fr  omfrdev edev lopingeasse tsasse  to meetmee  drivers to strategic investment in systems to maximise resre ouo ru cr ec e  fe ficiencyf• Opportunities• Wastewater case study exampleLegislation, climate change and other pressures demand long ‐long terte mr  visionClimate change legislationWFD objectivesCapped budgetsgREARE CA TIVE:Customer prioritiesharder, higher costVISION:Transformed assets: adapted to climate PLANNED: change and carbon easier, lowest  costefficient;Anticipate future trendsRisks controlledReduce operating cost riskAvoid stranded assetsClimate change impactsControl and manage Rising energy / ca br on pricesrisks to whole life costsDemographic & social changes3Particular issues for water industry•Assets have longlong liveswhat is built now will serve for decades into the future•Assets have high write-off costsstranded assets reduce investment returns and efficiency•Capital investment needed so assets can accommodate:energy cost inflation (to ensure operating cost efficiency)regulatory risksrisksclimate change mitigation strategic resources risks… while obtaining value for money Operating cost risk: Effect of annual power cost inflation o non 40yr power costs ofof a 160 000,pe STW Inflation in UK From To%inc. per annum Sourceindustrial power 197920076.7BERRcosts199720073.3Eurostat2004200711.0Eurostat2006200718.5BERR£35 2007200814.2BERR0.00%1.00%£30 2.00%3.00%£25 s4.00%5.00%n £20 6.00%7.00%£15 8.00%9.00% Millio£10 00%.1111 00%.£10 £5 £-010203040Regulatory risks: water environmentWater F rameworkFramework Directive• Significant investment to enhance capability• Carbon not explilicitlty accoun ed f ior fin rst cycle –opportunity lost?• Inequalities of whole life cost calculation –capex pressures override opex costsMost water coscos forecast. significant increases inCO emissions to meet 2water legislationRegulatory risks: climate change mitigationGovGo ev rnmenetrnmen ta  rgerg te 80%  reductionr by 2050 plus interim budgets set by Climate Change Committee CRCCR  energy  ffe i ic ency  hsc eme lhauncde  in 2010• Affects orgs. using more than 6000MWh/yr of electricity• Power largest element in water co. carbon footprint• PotPo et ne tn it ai l incr easeincrin   cost of permits from 2013 is significansignific tan risk Expectations of future development“…meet our long term sustainability duties….align with wider policy on GHG reductions…”OFWAT Climate Change Policy Statement 2008“The group believes that the Price Review, together with the ongoing work of the WFD, could provide an important impetus to the tsec or to ensure th ta  it f  ulllly equips it  self to tmee  the acute environmental challenge posed by climate change, in the most sustsus ainablet waywa  possible ”.All Party Parliamentary Water Group: The future of the UK Water SectorSect(2008) Strategic resources risks: Phosphorus• P essential to food productionpr• P fertiliser price up 300% in las tlas tw otw ye  aye rsr• ‘Peak’  year predicted to be 2034 • Government regulation likely:likChina has placed a   Peak phosphorus ‘Hubbert’ curve, 135% tariff on P reserves(based on Cordell, Drangert and • P in  sew asew geg is  re  cre oc veo rve ar blb e White, 2009)strategic resourceA new focus on resource efficiency managementFocus on achieving carbon efficiency: minimise the carbon emissions …•per customer served•per unit volume conveyed (pumped)•per unit ofof pollution load removedWherever possible …Modelling is keyAvoid the use of energy and resources Reduce energy and resource useRecover energy and resourcesReplace existing energy (and resources) with low carbon alternatives