Industry fights on fact, loses on emotions in Brussels. Just contrast the latest NGO campaign you’ve come across to that bland position paper (see here) you just wrote that ‘welcomes the Commission’s proposal’ and then lists all the facts that make it a complete disaster for your industry. Yet while many public affairs professionals understand that to win a debate emotion is as important as logic, as soon as it is suggested that emotion may be deployed in their advocacy panic sets in. So what’s to be frightened of in arguments that seek to illicit an emotional as well as logical response?
First of all, fear itself. When consultants, including this one, show examples of emotion being used it is generally campaigns that stoke fear of some kind. For a bunch of people trying to save the planet/children/future, NGOs tend to use fear a lot; fear of the unknown, fear of chemicals killing your children or fear the world’s going to end sooner rather than later. Many industries’ only emotional angle is to talk of industries closing and jobs leaving. Yet even in this they are timid. When I see an industry do something like create a line of jobless Europeans from the Berlaymont to the Spinelli building I’ll know they’ve got it. The problem is industry never will. Fear does not resonate with the corporate brand the CEO is trying to engender. Too much fear risks spooking shareholders and unnerving customers. We are about to be put out of business is not great for the share price.
Unhappily, as fear is the emotion banded about most, this causes many public affairs professionals to shun any kind of emotional line of argumentation.
Secondly, facts get in the way. Many of the public affairs professionals in Brussels come from organisations where the predominant culture is people who like either numbers or science. These folks natural tendency is to look at the data and build up to a message. Naturally, this makes the arguments developed factual ones. Dry. Unemotional. Facts. Facts are important, and should remain so. I don’t see an argument not supported by them ever winning. But they are necessary, not sufficient to win. The flipside of the coin would be to find an argument that convinces people and then find the facts to support it. It’s no less factual, just more likely to convince.
So what can you do? Next time you are devising your next position paper, letter, or preparing a meeting ask yourself the following questions:
- What do you want your audience to know?
- What do you want your audience to think?
- What do you want your audience to feel?
- What do you want your audience to do?
They may help you structure your argument in a way that takes the audience through awareness to understanding and then belief and action. To help with the feel question, here’s a list of emotions that may provide inspiration. As while fear may be used, things like hope may be better placed to meet your organization’s goals. And remember, hope has been known to win things like elections. Emotion. Yes, we can.
December 3, 2013
Party hats out.
The European Commission informed the world Wednesday that at least 20% of the European Union’s budget for the next 2014-2020 funding period will be spent on climate-related projects and policies.
Says Connie Hedegaard, the EU’s climate watchdog honcho, in the Commission press release: ”Today is an incredibly important day for Europe and for the fight against climate change….This is a major step forward for our efforts to handle the climate crisis…”
And: “This underscores yet again Europe’s leadership in the fight against this crucial challenge. I believe the EU is the first region in the world to mainstream climate action into its whole budget.”
Hedegaard’s gushy tendencies and legacy-craving aside, there a few points here to consider.
First, the tone-deaf question: With European and Eurozone unemployment, take your pick, still at record levels, economic growth still limping along and deflation in Europe now a creeping threat because of the aforementioned, is the Commission’s, Hedegaard’s, chest-beating on EU climate change ‘leadership’ something people in Europe really care about right now?
Secondly, sentient beings are generally already aware that climate change abatement is a high EU policy priority – the only one actually where alignment exists between Member States — and that the EU and European nations have enviably produced all sorts of meaningful and important policies to decarbonize Europe. But chest-beating on an almost daily basis about it, as Hedegaard does, is desperate.
Worse for Hedegaard and Company is that the ritual of telling the world how the EU, representing a mere 10% of global emissions, ‘leads’ on climate change is often a quiet picture, with a self-designated leader with no one following from behind.
Third, what matters most actually, though, comes down to outcomes, not inputs of how much cash your throwing at the important problem, and the chest-beating.
A couple of examples are instructive: Despite being the engine of the continent’s renewable energy spending, Germany is still expected to see carbon emissions rise this year by 2%, while carbon emissions in the U.S. are falling (from a high base, of course) and near a 20-year low.
Electricity from the dirtiest fossil fuel, coal, is filling the gap in Germany for the series of natural gas power plants closed the past two years from the unintended consequences of Germany’s uber spending on solar and wind power; meanwhile, the long-told story of America’s jackpot with shale gas has resulted in the shuttering of dozens of coal plants and falling emissions there and tanker-loads of of cheap coal exports to Europe, among other places.
If Europe wasn’t mired in recession, its emissions would be higher by any measure. And many Europeans probably would hope, quietly, that carbon emissions actually begin to rise again in the continent as a bloc as an indication that economic conditions are improving.
To paraphrase the tired saying: speak lightly, Hedegaard and Company, but carry a big stick.
By Spencer Swartz
November 20, 2013
Who said Brussels is boring?
We talked about the vote in the Parliament earlier this week already and we were waiting for the European Council conclusions. Well, Heads of States and Government have just declared that “the timely adoption of a strong EU General Data Protection framework is essential for the completion of the Digital Single Market by 2015.”
As some of us know, a draft text prepared by the Council was suggesting the adoption next year of the regulation. While the wording “next year” was already quite vague as a deadline (before or after the EP elections?), the text officially adopted today removes a deadline entirely thus showing the reluctance amongst member states to commit to a firm timeline.
And now, what’s next? The Parliament wants to enter negotiations with Council and Commission to wrap up the text next year. I feel that besides Poland and France there is no other member state that really wants to rush the legislation. We know that industry has been calling for a deeper discussion given the complexity of this dossier. This week I saw a few reactions from civil society groups and activists and, funnily enough, they now somehow agree with industry by saying that the legislation should not be rushed (they complain about the secrete tripartite negotiation that could allow to adopt the text).
The final interesting bit of info is that the rapporteur Albrecht stated during this week’s press conference that the European Parliament will hold a plenary vote in April (TBC) on the regulation, either on the text adopted in committee or on the compromise text emerging from the trialogue (if they reach a deal). To me this means the following: if Albrecht is reelected during next year’s EP elections he might regain the role of rapporteur on the data protection dossier. This means that, should the EU Institutions have to start looking at the dossier again in 2014, the European Parliament will already have its official report that then the Council will have to deal with. Stakeholders’ reactions to the LIBE text have not been that positive so this means that we will stick to the text we have seen adopted.
October 25, 2013
Yesterday evening EU public affairs practitioners were ready to face one of the longest votes that a parliamentary committee could experience. Food was brought into offices, colleagues had been warned not to bother people that would follow this marathon vote, clients were alerted well in advance about the length of the voting … and … things went differently.
The vote on the famous data protection regulation (that by now everybody knows is one of the most relevant pieces of legislation that the EU is adopting) went very fast: in around half an hour all compromise amendments (CAs) had been voted in favour by the LIBE Committee and the final report was adopted by 49 votes to 1. To be frank, with the EPP declaring its full support on the CAs during the day and knowing that all other parties were already backing up the compromises, there was little surprise in these results. The text adopted, still to be fully digested by organisations, confirms the line taken by the Commission and strengthens some provisions. For instance, sanctions: organisations that do not comply with the obligations laid down in the regulation can be fined up to 5% of the annual worldwide turnover (EC asked for 2%). I am sure you’ll agree with me that this is a huge percentage. Consent remains strong in the text: it has to be explicit and informed. The right to be forgotten has become “Right to erase”; the deletion of an individual’s personal data on the internet and the deletion request to third parties is also foreseen. Finally, thanks to the NSA episode, transfer of data to third countries can only occur under European law or an agreement based on European law. Without any concrete agreement there would be no data processing by telecommunication and internet companies allowed.
What’s next? The committee voted to enter into inter-institutional negotiations (so called “trialogue”). The European Council will discuss data protection this week on 24-25 October. We know that most member states are reluctant to commit to a deadline so it is unlikely that the legislation will be adopted by March 2014 unless the Council agrees on a clear direction.
More to follow then.
October 22, 2013
Any regular reader of this blog knows that we tend to take ourselves pretty seriously. I mean, we’re serious consultants with serious work to do and serious policy areas to ponder! We’re passionate about the issues of the day that will affect our work, our clients, and life in general out there in the wild blue yonder; whether it be how the German elections could impact the direction of energy policy, or how the twittersphere is chiming in on Europe.
We’re also passionate about cake. Yes, you read that correctly, cake: the edible foodstuff that is sweet and moist and can be blamed for ever-expanding waistlines of office workers, worldwide.
Now it seems, as the resident baking enthusiast here at FleishmanHillard (and instigator of semi-regular, now infamous ‘cake competitions’), I’ve begun to get a bit of a reputation. So when colleagues spotted an opportunity to form a team to participate in the BritCham Great Brussels Charity Bake Off competition, they knew exactly who to call. We pulled together a team of bakers (me, Jane, Sandrine, & Maria Chiara), gave ourselves a name “FHun in the Oven” (apparently makes Brits chuckle – thanks James), and decided to bake a good ol’ fashioned Hummingbird Cake – a specialty of this famous London bakery (Like a carrot cake, but not. See the recipe below).
After some fun Sunday-evening adventures (Batter tasting! Bowl licking! Icing-testing!), and one happily-averted mishap that almost ended with the top layer of our cake on the pavement of Rue Goffart, we were feeling pretty good (read: in a sugar-induced coma) about our handiwork…
…Until we started checking out the twitter feed #BxlBakeOff and saw the seriousness with which our competitors clearly take themselves.
The competition was fierce and I mean fierce. 24 cakes. There were cakes with squirrels and acorns fashioned out of chocolate-covered macadamia nuts…
There were orange-frosted Halloween themed cakes that tasted like my childhood and were adorned with creepy little edible marzipan bats & rats!
There was even a cake depicting an EU legislative timeline! I mean, these people really do EAT, breathe and sleep their work! Needless to say, our humble little hummingbird cake, despite its deliciousness, found itself a little out of its league amongst the worthy competitors.
The winner was a 3-layered cake, with each layer representing a color of the Belgian flag. It was wrapped in a Belgian flag banner, covered in what I think was chocolate ganache, and had a 3D edible version of The Grand Place atop its chocolate & edible-flower be-carpeted self. Hmpf. I know it’s hard to believe. I didn’t get a picture, so recommend checking out Judge Emma Beddington’s instagram’d capture for photographic evidence. She has also written, in hilarious fashion, about her experience as a judge in a post on her own blog, Belgian Waffle – and it’s well worth a read (plus there are more pictures!)
Ok, so we didn’t win this time. And we’re not sore losers. (No really, we’re not!) But now that we know what we’re up against, well let’s just say: challenge accepted!
Roll on November, where ‘Pie’ features as the next competition category….and watch this space for further tales of our competitive baking adventures!
*All pictures shown in this post were taken by me, Lindsay Hammes, with handy-dandy blackberry
The Hummingbird Bakery’s eponymous cake
What you’ll need:
300 g caster sugar
300 ml sunflower oil
270 g peeled bananas, mashed
1 teaspoon ground cinnamon, plus extra to decorate
300 g plain flour
1 tsp bicarbonate of soda
½ tsp salt
½ tsp vanilla extract
100g tinned pineapple, cut into small pieces
100 g shelled pecan nuts (or walnuts) chopped, and whole, to decorate* (we used both, pecans in the cake, walnuts on top)
3 20cm cake tins, base-lined with greaseproof paper
250g cream cheese
100g unsalted butter
600g icing sugar, sifted
Preheat the oven to 170 C/325 F/Gas 3.
Put sugar, eggs, oil, banana and cinnamon in a freestanding electric mixer with a paddle attachment (or use a handheld electric whisk) and beat until all the ingredients are well incorporated (don’t worry if the mixture looks lightly split.) Slowly add the flour, bicarb soda, salt and vanilla extract and continue to beat until everything is well mixed.
Stir in the chopped pineapple and pecan nuts by hand until evenly dispersed.
Pour the mixture into the prepared cake tins and smooth over with a palette knife. Bake in the preheated oven for 20-25 minutes, or until golden brown and the sponge bounces back when touched. Leave the cakes to cool slightly in the tins before turning out onto a wire cooling rack to cool completely.
In a separate bowl, beat icing sugar & bitter together in a freestanding electric mixer with paddle attachment (or use a handheld electric whisk) on a medium slow speed until the mixture comes together and is wel mixed. Add the cream cheese in one go and beat until it is completely incorporated. Turn the mixer up to medium-high speed. Continue beating until the frosting is light and fluffy, at least 5 minutes. Do not overbeat, as it can quickly become runny.
When the cakes are cold, put one on a cake stand and spread about one quarter of the cream cheese frosting over it with a palette knife. Place a second cake on top and spread another quarter of the frosting over it. Top with the last cake and spread the remaining frosting over the top and sides. Finish with pecan nuts and a light sprinkling of cinnamon.
October 16, 2013
Last week, high in the Austrian mountains the health policy community gathered for the annual Gastein European Public Health Forum (EHFG). With a dramatic mark left on health and healthcare systems by the crisis, and economics (and fiscal governance) part of today’s reality, the focus was on how Europe can build resilient and innovative healthcare systems.
Recognising that health is a value in itself and a key driver of economic growth and prosperity, ensuring health systems contribute to citizens living longer, healthier and more productive lives, is an imperative. With this in mind, the consensus was clear: investing in health, innovating (in many ways), and making health systems more efficient, effective and sustainable, is pivotal. From an EU policy perspective a plethora of initiatives are already under development, with key ones on the table for discussion this autumn.
But what more can and must be done ? Undoubtedly, it’s a challenging and complex equation to solve, involving many areas and actors. There’s lessons to be learned, choices to be made both at a policy and practical implementation level. Grasping the opportunity to change will take resilience and innovation in policy making too. At the end of the day its about people and they matter as individuals, to the economy and society.
October 7, 2013
This summer time I was asked to write an article for the online catholic outlet “Agir en Chrétiens informés” as (Belgian) readers of this publication were curious to know more about the concept of lobbying given the somehow bad image that the activity has in the country.
So, I had to think about the basics of my day job and by doing so I found it refreshing to 1. apparently still be able to explain in simple terms what so many of us do in Brussels 2. hopefully manage to convince part of the Belgian catholic community that there are some prejudices against lobbying which are worth demystify.
Here is the full article and below some extracts of it – all in French… et donc bonne lecture aux francophones parmi vous!
BTW – just read a very interesting speech of Commissioner Maroš Šefčovič, who back in June spoke about transparency and integrity in lobbying. Very interesting remarks such as “lobbying isn’t just about big business trying to impose its agenda on the lawmakers although this is the perception many people have. Nowadays, lobbying can come from everyone: from religious groups to law firms, think tanks to NGOs, from cities to trade unions, industry associations to advocacy groups. It represents – and should represent – the whole diversity of our societies.”
Qu’est-ce-que le lobbying ?
La définition de la représentation d’intérêts (lobbying) est donnée par les Institutions européennes: « toutes les activités qui visent à influer sur l’élaboration des politiques et les processus décisionnels des institutions européennes ».
Est-il souhaitable ?
Oui. Les décideurs européens (et je pense aux députés européens en particulier) sont normalement, sauf à de rares exceptions, des généralistes et n’ont donc pas d’expertise technique sur les sujets sur lesquels ils doivent légiférer. Ils ont besoin de l’expertise et des avis des différentes parties prenantes pour décider en connaissance de cause. Les différentes intérêts amèneront leur point de vue sur l’impact que telle ou telle mesure (directive, règlement etc.) pourrait avoir sur la société, l’environnement, l’économie, l’emploi etc. et exprimeront leurs suggestions et desiderata. Il reviendra ensuite au législateur, et à lui seul, de trancher.
Je pense que la démocratie a besoin de ce mécanisme : il est souhaitable que les parties prenantes puissent s’exprimer et donner leur avis aux responsables politiques. Le texte final sera forcément un compromis, qui ce sera nourri de ces échanges.
Les industriels sont-ils les seuls à avoir les moyens de faire du lobbying ?
Non. Il existe un préjugé tenace à propos des entreprises : on pense que ce sont elles qui sont le plus présentes sur la scène européenne et que ce sont toujours leurs intérêts qui triomphent. Pour démystifier cette idée préconçue, voici les données présentent sur le registre européen de transparence mentionnée ci-dessus. Au 24 Juillet 2013 il y avait 5872 organisations enregistrées sur le registre. Les chiffres parlent d’eux-mêmes:
- 684 Cabinets de consultants spécialisés/cabinets d’avocats/consultants agissant en qualité d’indépendants
- 2 925 Représentants internes et groupements professionnels
- 1 527 Organisations non gouvernementales
- 424 Groupes de réflexion, organismes de recherche et institutions académiques
- 40 Organisations représentant des églises et des communautés religieuses
- 272 Organisations représentant des autorités locales, régionales et municipales, autres entités publiques ou mixtes, etc.
Est-ce que les entreprises, grâce à leurs moyens financiers, ont plus d’influence par rapport aux ONG ?
Non. Je pense que le seul et véritable atout dans une campagne de lobby est la qualité de l’argumentation. Même les outils les plus sophistiqués ne peuvent pas être percutants si les argumentaires ne sont pas bien fondés. Il y a des exemples de campagnes de lobby organisées par des ONG avec peu de moyens, qui ont été couronnées des succès.
Est-ce que les outils de lobbying ont évolués ?
Oui. Il y a des années, on rencontrait les décideurs face à face et on présentait nos points de vue sur un document d’une page. Maintenant les campagnes de sensibilisation peuvent s’appuyer sur différents outils – y compris les médias sociaux pour engager et influencer l’opinion publique et les audiences clés. Je cite les media sociaux en particulier car en 2011, l’entreprise pour laquelle je travaille a effectué une étude sur l’utilisation d’internet par les députés européens. Nous avons relevé que 34% des députés utilisent twitter pour communiquer et 67% utilisent wikipedia au moins une fois par semaine pour s’informer et nourrir leur point de vue. C’est donc aussi à travers les media sociaux qu’on peut faire passer un message.
September 30, 2013
Getting Europe into a truly connected mode is proving to be especially difficult. It has been left to the EU’s 72 year old Digital Agenda Commissioner Neelie Kroes to tackle the gridlock on Europe’s networks.
Kroes has unveiled a series of bold telecoms reforms to bring Europe up to speed. They are described as the biggest regulatory overhaul in 26 years. But no sooner than the proposals were tabled than they came under attack from regulators to operators to parliamentarians. The major criticism so far is that there is not enough time left in the mandates of the current Commission and European Parliament –which expire next year—for such an ambitious package to be approved. But Kroes counters that Europe cannot wait as it falls behind the rest of the world in connectivity. Without new high speed networks, Europe’s economy, its industries and consumers will all suffer. Its networks are simply too slow, unreliable and insecure for Europe to remain competitive. ”The telecoms sector hasn’t had its Lehman moment yet. But with declining revenues, rising debt, dated business models, I worry about that happening,” says Kroes.
Many of the Commission’s proposals are far reaching such as the politically popular scrapping of roaming charges across Europe. Consumer groups claim “roaming rip offs” and do not square with the notion of a Digital Single Market. Kroes is encouraging operators to develop plans to allow their customers to “roam like at home” meaning they should pay nothing more for data or phone calls when they are abroad.
Europe’s telecoms operators claim they are suffering from intense regulation, competition from new players who do not invest, and a lack of capital to roll out high speed networks estimated to cost 250 billion euros or more. Operator revenues continue to decline while the net investment rate in new infrastructure amounts to virtually zero. Domestic markets are saturated but entering new markets is fraught with regulatory problems. Kroes wants to make this easier so that a license to operate in one EU country is valid for all 28 member states. This should be welcome news to operators and serve as an incentive to consolidate. Europe does not need hundreds of operators while the United States has only two who have succeeded in deploying new 4G networks to nearly all consumers while only a quarter of Europeans enjoy similar access. Sadly missing from the Commission’s proposals is any clear regulatory guidance on consolidation in the telecoms markets which will now be dealt with separately by competition authorities. If European consolidation stalls, this leaves some heavily indebted European operators exposed to foreign takeover as we have recently seen with KPN (America Movil) and Telefonica (AT&T).
To encourage faster and better wireless connections from fast 4G to urban WiFi, the Commission is proposing new spectrum auction rules to make it easier to plan and bid across countries. Europe currently faces a tangled mess of rules and prices. Operators remain wary about how these new auctions will be organized. The last time around, they overpaid billions of euros into state coffers and robbed themselves of much needed new investment capital. The Commission is now warning member governments not to treat spectrum as a cash cow. Nevertheless, the latest coordinated spectrum rules should generally be welcomed if auction prices are kept under control.
Perhaps the most polarizing issue is a proposal on “net neutrality” which for the first time would introduce new safeguards in Europe for an open Internet. The blocking and throttling of popular free data heavy or competing services such as Skype would be banned. Consumers would have the right to check if they are receiving the internet speeds they pay for and can terminate their contracts if speeds are not delivered. EU consumers receive only 74 per cent of the advertised headline speeds they have paid for.
Some innovative thinking has been going on to try to unblock the standoffs between operators and content providers. If new high speed networks are to be built, rich digital content needs to nurture them. Kroes has launched the idea of allowing “specialized services” with premium quality so long as they do not interfere with internet speeds promised to other customers. Some premium services could include IPTV, video on demand but also e health applications such as high resolution medical imaging, virtual operating theaters and well as business critical data intensive cloud applications. Consumer groups are vocal about the dangers of creating a two tier internet which would be counter to the open and non-discriminatory model. But the Commission sees premium services as a way to enable telecoms operators to generate additional revenue streams to finance new investments.
EU heads of state and government will be considering Kroes’s package at a special Digital Agenda summit meeting in late October. Some member states are considering whether a more comprehensive set of reforms is needed to create an ambitious new digital single market for Europe. Regulators are concerned that the package is being “rushed through” and that the plans risked undermining the legal certainty needed by companies to invest. Leading members of the European Parliament are complaining that the reform package is too late to be approved by next spring.
Kroes certainly deserves credit for making some important recommendations to get Europe connected and re-establish its long lost lead in the ICT sector. Whatever the outcome of the current debate, the Commissioner has set in motion a series of far reaching ideas likely to be carried over and considered by the next European Commission when it takes over in late 2014.
September 30, 2013
Yesterday ECHA produced a report entitled “Estimating the abatement costs of hazardous chemicals. A review of the results of six case studies”.
The report looks at how to work out the cost of the substitution of hazardous chemicals.
The costs of substituting one chemical for another are a key issue in REACH. It is not new to EU product regulation. Working out the financial merits, or the lack of them, for phasing out the use of a chemical has been a fact of life for years under the RoHS Directive.
Is there a Perfect Model?
This report looks at whether there is a perfect model to use in working out these costs and savings. The answer is no.
The main conclusion of the report is that it is not straight forward and there is no simple method for working out the costs or the relative benefits/losses or the lack of them.
The study looks to estimate the cost of abatement for:
- Nonylphenol (NP) and nonylphenolethoxylates (NPE) used primarily as surfactants in the textile sector;
- Four phthalates (DEHP, DBP, BBP and DIBP) used as plasticisers in a wide range of processes and products;
- 1,4 dichlorobenzene (DCB) used in air fresheners and toilet blocks;
- Lead used for pellets in shotgun cartridges;
- HBCDD, a brominated flame retardant used in polystyrene insulation material;
- MDA for various uses, including polyimides and as a hardener in resins and adhesives
The aim of the work was to improve the capability in assessing the costs of producing the use, permissions or exposure of hazardous substances, to explore and develop some of the theoretical and methodological aspects specific to hazardous chemicals, and to understand what barriers there might be too useful estimation.
The authors of the report acknowledge from the beginning that the cost estimates are “subject to significant uncertainty”. The need to do guestimates is touched on in the report. The reasons vary. Sometimes the producers have wanted to keep the information confidential. In other instances, the costs of switching from one substance to another have been overestimated, but in others under estimated.
There is a basic challenge of working out what the cost benefits in the “case of the use of hazardous substances the bad will generally be negative impacts on human health and the environment.” The report notes the cost benefits of not using hazardous substances in reduced waste treatment and emission control costs is often not accounted for.
There appears to be a simple complexity to working out the costs for substituting hazardous chemical substances. The report notes that in some cases the higher costs never materialized.
Simplicity v Complexity
And, a simple cost comparison between and existing substance and a replacement does not provide an accurate measure of the real cost of substitution. Just because one substance is cheaper than another can often fail to take into account reduced emission controls and waste treatment costs of the replacement.
There is an interesting debate about how to take into account replacing “sunk capital costs” when using a new substance. As the costs of the old capital are cost, some are of the view is that those costs of replacement should be excluded. The old machinery is a sunk cost and its only value is the value of being sold on or scrap. Others think that some account should be taken.
Interestingly, the report is not categorical on whether substituting substances leads to overall higher prices. Sometimes reducing the use of a substance might actually generate savings because the alternatives are cheap.
No Simple Answer
Working out the costs of benefits for substituting is not as clear cut as it is other areas like air pollution. The report concludes:
That complexity, especially compared with ‘more traditional’ abatement costing relating to, e.g., air pollution, is often related to the fact that hazardous substances, as well as potentially having negative impacts on human health and/or the environment, have quite particular functions which are the source of their value and the reasons why they are used in the first place. Abatement options, including substitution to alternative substances or technologies, often impair this functionality, which in turn implies reductions in value…
The challenge in estimating abatement costs in these circumstances is to account for these impacts on value and the costs of any mitigating actions which might be adopted as a response. This is a challenge because the value of the specific function in question is generally not observable in the prices of products and the costs of processes (which are essentially bundles of input characteristics each with their own value or cost). Differences in price between alternatives are an inaccurate measure in these situations since the price of a substance is only one input into the total cost of the process, and using a ‘cheaper’ alternative might involve incurring costs in other ways. Hence, the cost of reductions in value complementary inputs and/or mitigating actions associated with using alternatives are difficult to observe, measure and estimate, but knowledge of each is necessary to estimate abatement costs accurately” (p.13-14).
The report is a fair and objective look at the issue. There is no silver bullet and it is complex. But, just because it is complex does not mean the information is not useful.
September 26, 2013
Frau Merkel won big in Germany’s federal elections on Sunday, but not big enough; and that has negative implications for German energy policy.
Merkel’s third time around as German Chancellor will require a grand coalition that produces the typical lowest common denominator style decision-making that such coalitions bring. That doesn’t bode well for the decisive action required to address Germany’s outstanding energy issues, namely, runaway electricity costs and the future of shale gas development.
Merkel personally won commandingly, of course, with her Christian Democrat conservatives increasing their share of the vote by eight percentage points to around 42 percent, as Der Spiegel reported, but not enough for an absolute majority.
Further, her pro-business, junior coalition partner, the Free Democrats, failed to garner the necessary 5% share of the vote threshold needed to stay in parliament. Absent an absolute majority, that leaves Merkel dependent once again facing the need to join forces with the Left: the Social Democrats, whom she depended for her coalition in her first chancellorship in 2005, or(however remote the chances) the Green Party.
The SPD and its Green Party partners have a majority in the Bundesrat, the second house of parliament where the 16 federal states are represented, as the Financial Times reported Monday, meaning, all major legislative items will have be taken on the basis of compromise.
So how might decision making-by-grand-committee translate for German energy policy? Expect big changes to correct the country’s unwieldy renewable energy policy? Expect shale gas exploration to be given a clean go ahead (without a raft of new regulatory requirements)? I wouldn’t bet on either.
RISING POWER COSTS AND SHALE
Beset with some of Europe’s highest power costs, Germany’s ambitions for a quick and big shift to wind and solar power has become economically unsustainable, as we’ve heard in spades in recent months. High energy prices are not, intrinsically, a bad thing altogether if they occur over time. They help reduce wasteful consumption, which is good both for ultimately keeping a lid on prices and for environmental stewardship, and incentivize investment.
But because of overly generous subsidies to wind and solar generators, German residential power prices have spiked some 70% since 1998, making them among the highest in Europe, behind only Cyprus and Denmark, according to EU data Bloomberg cited in a story last week; in 2014 alone, the renewable surcharge that will be added to consumer power bills is projected to rise 20%.
Last week, Germany’s BDI, which represents the country’s biggest companies who are worried about Germany’s competitive position in Europe and against the U.S. because of high energy costs, called on Merkel to eliminate the costly feed-in tariff subsidy that guarantees wind and solar generators above-market payments for 20 years under Germany’s renewable law.
Thus, what Germans are becoming loathe to realize is that the process of switching off all of the country’s nuclear reactors by 2022 and leaning heavily on wind and solar power to plug the gap is not actually a short term, low-cost endeavor. Ripping up energy infrastructure that took decades to put into place actually requires decades to replace in order to make the switching and transition costs palatable and acceptable across society.
It will also take decades and many multiple billions of euros to build all the needed transmission infrastructure to wheel power from Germany’s north, where all the country’s wind and solar generators have been built, to Germany’s industrial south where the demand is. Ambition requires real-world pragmatism.
Killing the feed-in tariff seems unlikely for various political and economic reasons. For starters, the SDP loves it and so do the Greens, even if they acknowledge costs need to be contained somehow. The Christian Democrats and Social Democrats agree that Germany’s feed-in tariff law needs to be reformed, but they differ sizably on how to do it, as online German solar portal, SolarServer, recently observed.
With the election behind her, Merkel will come off the fence on shale gas, an issue she’s generally been silent on. But even if her pragmatic ways lead to a thumbs up for shale gas, her coalition partners and the German people are bound to have other thoughts. An absolute majority for Merkel and the Christian Democrats would have presented her with a mandate to make the case for shale gas to the German public, without having to placate Leftist coalition partners.
Hydraulic fracturing, the method employed to extract shale gas, has been used in Germany to initiate extraction of conventional but very tough to tap oil deposits since the 1960s – without incident. Yet, despite shale gas risks being obviously manageable based on the industry’s long track record, German public and political opinion on the Left (and even for some on the Right)has been staunchly opposed to shale gas development because of environmental concerns. And the post German election period is unlikely to change that sentiment, at least in the short term.
Squaring those energy issues through the inherent consenusal nature of the grand coalition that emerges in Germany, whatever its composition, will be a very tall task. Lowest common denominator decision-making poses a natural barrier against the type of decisive political actions required to meaningfully iron out Germany’s renewable energy fiasco and to open up a new avenue for energy supply security in shale gas.
Thus, the fortunes of the dirtiest of all fuel sources, coal, will continue to flourish in Germany. Coal remains abundant and cheap — especially as weak wholesale power prices, triggered by subsidized renewables, push more and more pricier gas-fired power generation out of operation. That is why coal’s share in the German power mix is expected to stay above 50%, more than any other source, in the forseeable future, according to industry analysts.
September 23, 2013