Hill+Knowlton Strategies

And the answer is: you can have them in any colour as long as it’s black…or in the case of solar panels, a sort of silvery dark blue. Ok, so the analogy isn’t great, but the premise behind it is the same. Much like the iconic early twentieth century car, say the phrase “solar installation” to someone, and it’s usually only one single colour that springs to mind. Images of a shimmering expanse of solar panels, spread like a sea over the countryside or shining from our rooftops, conjure up many well deserved accolades of sustainability and efficiency, but a thing of beauty? Not such a common first reaction. Indeed, solar installations are often criticised for their appearance. One of the most common objections to large scale solar projects is the visual impact. How are these futuristic looking developments going to fit in with England’s green and pleasant lands?
It’s understandable why people are worried, but they needn’t be. The answer lies with changing people’s perceptions of solar. It can be beautiful – it can be art. Solar artwork is a creative genre which challenges the common misconceptions of solar by creating solar powered art installations.

Solar Collector: Image credited to Gorbet Design Inc

Take the Solar Collector, for example. A sculpture created by artists Matt Gorbet, Rob Gorbet, and Susan LK Gorbet, this large scale project features several shafts which create patterns of light performed at dusk each evening. And yes, it’s entirely powered by solar. You can even create your own pattern online.

Or take the beautiful works of Sarah Hall – photovoltaic installations that look more like stained glass. She captures images of waterfalls cascading down buildings, or leaves floating across a wall, and makes you forget that this is a working solar installation. It’s generating electricity as you look at it.

Leaves of Light by Sarah Hall: Image credited to Sarah Hall

The possibilities for combining solar with aesthetically pleasing design are endless. Take the Blue Forest project in Abu Dhabi, for instance. Working in collaboration with Solar Artworks, Blue Team Architects are creating a public area, shaded by solar panel “trees”. When the sun goes down, the clean energy that has been collected can be used to power LED lights to illuminate the space after dusk.

So solar plants and visually appealing installations need not be mutually exclusive. Whether on a large or small scale, with a bit of ingenuity and a whole lot of creative talent, I envisage it won’t be long before the phrase “solar installation” conjures up a very different image indeed.

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With Earth Day activities in progress across the Unites States and the rest of world, I am wondering what relevance this day of activism still has. In an excellent blog post, my colleague Lena Davie rightly points out that it is great that people dedicate a day to the environment, but action on just one single day each year is hardly going to have much effect. This is a timely reminder. While Earth Day has become part of American national culture and as such is important on a symbolic level, it is questionable how effective it really is in light of today’s environmental challenges.

Historically, Earth Day certainly was significant. A recent study by the historian Adam Rome, The Genius of Earth Day, reminds us of the scale of the original 1970’s event, and tracks its impact. Rome shows how the idea of a nation-wide environmental teach-in, proclaimed by Wisconsin Senator Gaylord Nelson on September 20, 1969, inspired more than 12,000 events across the country on the original Earth Day on April 22, 1970. This success was largely due to the fact that Nelson was smart enough to hire dedicated staffers to organize the teach-in but also allowed his idea to go viral by not insisting on top-down control of the individual events and their messaging.

And so a diverse group became a movement, consisting of liberals looking to better the quality of life; scientists concerned with, and documenting, the level of pollution of water, ground and air; middle-class women worried about their deteriorating environment; young activists interpreting the fight for the environment as just another incarnation of the fight against the ‘system;’ and conservationists active since the era of Teddy Roosevelt. Nelson didn’t mind these groups taking ownership of his idea, and this helped the idea to go viral and ultimately to form a generation of environmentalists and environmentally conscious citizens. So nothing is as powerful as an idea whose time has come, it seems. And indeed: Earth Day 1970 highlighted an environmental crisis in the U.S. that quickly became apparent and tangible to every citizen. Remember, this was before any efficient regulation of polluting industries was in place.

Rome’s study also shows, however, that the original Earth Day was about much more than these tangible quality-of-life issues. While pollution of rivers, lakes and the oceans, of air and soil certainly stirred up much attention, it was also largely noncontroversial that this was not a good thing. The questions posed by the movement in 1970, however, were more fundamental. I find two points are of particular interest today: What I would call the question of a sustainable way-of-life, and the question of sustainable growth.

Inquiring about a sustainable way-of-life, for instance, was largely questioning the suburbanization of the United States. A lot of attention in the late 1960s was given to the fact that with the growth of suburbia the natural land is shrinking, and often valuable habitats are destroyed. This criticism of suburbia has great implications, because suburbia is the home of hydrocarbon man and to a large degree based on the availability and affordability of cars and fuel. With suburbia come motorways, and traffic, and the national fixation on the gas price. Living in New York City it is easy to forget, but my impression from recent travels is that the Earth Day movement did not succeed in changing this, but that the development of ever more suburban sprawl continues today. And with it, the issue of sustainability.

The question of sustainable growth is even more interesting. The argument was that gross national product (GNP) is an insufficient indicator of wealth because its logic suggested that polluting and cleaning up would be more desirable than not polluting because the cleaning-up effort would also contribute to total GNP and thereby factor into the national wealth. If this ‘wealth’ includes negative environmental impacts, the argument goes, it is questionable that ‘wealth’ is so desirable after all. Sustainable growth would need a combination of quantitative and qualitative measurements which would allow marking pollution and counting it as a negative. Again, as fascinating as this argument is, I am not sure that this idea has much traction amongst economists and the informed public today. (It would certainly create a number of issues on its own.)

Coming back to the question of Earth Day’s significance today, I’m afraid it is a mixed bag. While it is great to have a dedicated, nation-wide day to think and learn about the environment and about sustainability, tangible action would be much preferred. I personally think that the only way to achieve real change would be an adequate price on pollution. Recent experiences with carbon trading in the European Union do not support much optimism.

It is said of Napoleon that the key question he would ask before deciding whether to promote someone to the rank of General would be to ask “Is he lucky?”  He believed that whether or not they had a track record of lucky breaks would be a good predictor of future success on the battlefield.

Certainly, we all know people who seem to have one disaster after another and others who glide through life unscathed by the “slings and arrows of outrageous misfortune”.

In the case of the Canadian oilsands industry, recent events suggest they would fail Napoleon’s test. There has been one unlucky break after another.  The latest came on the eve of a Canadian government news conference, aimed at assuring the population of coastal British Columbia that the authorities had robust idol spill defences in place and therefore need not be unduly concerned about the prospect of bitumen exports to Asia.

The event didn’t quite go as planned, as you can read here.

The UK solar industry has had an interesting time of late. From the rise of large scale installations and the important role for solar in the Renewables Roadmap, to the confusion over government tariffs and the lack of any new emphasis on solar in the budget, there’s been a lot going on. If this has left followers of the market overwhelmed, spare a thought for China, where their booming solar industry is poised on the brink of uncertainty after two accusations of anti-competitive behaviour.

Photo credit: Photonut on rgbstock.com

In the beginning, there was expensive solar…
The issue began with the Chinese solar industry’s ability to manufacture solar panels and components at a much cheaper price than any other market. And as the most attractive market for renewable energy in the world, this had quite an impact on prices globally. Chinese manufacturers were able to flood the market with solar components, all offered at a price that made it hard for US and European markets to compete. So why was China able to do this? Recently, the Chinese Government has placed great emphasis on cutting their carbon emissions and increasing the share of energy generated from renewable resources. As a result, solar panel production in China is heavily subsidised by the Government, making Chinese solar panels the cheaper option for installers in the US and Europe. This allows China to increase their share of the global solar manufacturing market at the expense of manufacturers elsewhere.

Obviously, this was not an ideal situation for the global solar PV manufacturing market, and in May last year, the US became the first country to introduce anti-dumping tariffs on all solar imports from China. Dumping, in this context, is a form of predatory pricing which involves selling products in an international market at a price too low for producers in the export markets to compete with. US Senator, Charles Schumer, confirmed that these measures where tough, but also necessary if the interests of the American solar manufacturing market were to be protected. China’s Commerce Ministry spokesman, Shen Danyang, counteracted this assertion by declaring their intention to fight this “unfair” ruling.

The result of this is the setting of a precedent for other global markets to follow suit, with Europe being the most recent of these. Last September, EU Prosun, an industry action group, launched a campaign against Chinese imports into Europe, asking the European Commission to investigate any alleged anti-competitive behaviour. Despite a strong counter-argument that any tariffs would damage the global solar market by pushing up installation prices, the European Commission announced their intention to continue with their investigation into the Chinese market. 

So what does this mean for the UK? 
Following the EC’s announcement, the European Union imposed the mandatory registration of all solar components imported into the EU from China. Between March 2013 and the predicted resolution date of 6 June, any Chinese solar imports have to be registered. This will allow the EU to retroactively impose anti-dumping tariffs should the Commission rule against the Chinese manufacturers. The impact of this move is already being felt in the UK market, where solar providers are facing cancelled orders from installers. With a high level of uncertainty over whether tariffs will be imposed retroactively, importers are unwilling to take on the risk, instead passing this on to installers in the form of price increases. In a report commissioned by AFASE, a body representing European solar manufacturers against the trade duties, Swiss analysts Prognos announced that the move could ultimately cut the UK solar industry by 80%, as well as costing the UK economy £3.46 billion and 38,600 jobs. The Solar Trade Association has voiced their opposition to any trade duties, asserting that any tariffs would damage confidence in what is already seen as an unstable market. Furthermore, the Chinese Government has announced its plans to retaliate if any duties are imposed.

In short, the imposition of trade duties on Chinese solar imports will have a far-reaching impact on the European and UK market. Manufacturers will gain a level playing field and an increased ability to compete, but at the cost of a severely reduced solar industry. The end customer will bear the brunt of price increases, and, in a fragile industry, the fate of many wholesale solar importers and installation companies hangs in the balance. So the question remains, is the cost of this investigation, and the price of market intervention, simply too high?

In my previous two blogs postings, we looked at two of the reasons why so many energy companies have been getting into trouble and finding the implementation of infrastructure projects to be so hard in many developed countries:

•  The end of the Age of Enlightenment has produced societies less persuaded by facts and more swayed by emotion.
•  The arrival of the Postmodern Age, in which there is a widespread acceptance of the notion that there is no such things as absolute truth and that “what is true for you need not be true for me”.

 The challenging environment has been further complicated by the rise of the Internet, which has profound implications for many companies, not least those in the energy industry.

 Every significant development in communications technology has had societal implications well beyond what the technical innovators could have imagined:

•  The fact that the printing press was introduced in Europe at the time of the Reformation was not a coincidence.  This revolutionary technology turbocharged the spread of new ideas.
•  More recently, it was the fax machine which effectively brought down the Iron Curtain at the end of the Cold War.  This (very) slow-motion Twitter enabled like-minded individuals to network and the Communist authorities lost their monopoly control of the mass-dissemination of information.

 If knowledge is power (and it always has been), then, in our own era, the Internet is moving power from institutions to networks.  The Internet enables individuals who share a common interest to identify each other and then coordinate and organise at close to zero marginal cost.  This is bringing tremendous benefits in areas such as medical research and less desirable outcomes for those engaged in anti-social or criminal activities.

 Many companies in the energy industry have yet to think through the implications of this shift in power.  In their project management, for example, they still think in terms of linear, predictable regulatory approval processes, while the unfolding reality is something much more akin to political theatre as a number of hitherto extraneous actors make uninvited but impactful appearances on a stage which the companies thought they controlled.

 Many of these NGOs are small, but they are savvy in their use of the new technology and, like the mass of tiny Lilliputians, can tie a giant Gulliver down to the ground with their thousands of individually tiny strands.

 The creation of networks is of course, a game that two can play, but energy companies will need to completely re-think their approach to what now needs to effectively be a political campaign strategy in the light of this new reality.

 The Internet is also, counterintuitively, contributing to a feeling that, while many of us are more connected than ever before, we also feel more alone.  This observable increase in alienation is one of the reasons why we’re seeing a marked decline in trust in many types of institution: a subject we’ll get to in the next blog posting.

In my previous posting, I looked at the problems that very fact-based enterprises, such as energy companies, were having with the end of the Age of Enlightenment.  This is an environment in which “non-factual factors”, such as emotion, faith or superstition are increasingly accepted as a valid basis for opinions.  This is a world in which it has become acceptable to say “your facts don’t change my feelings”; a world which is hard to navigate for very fact-based individuals and organisations.

 To make matters worse for such companies, they’re also trying to operate in the Postmodern Age.

 Part of the Wikipedia entry on Postmodernism reads:

 “Postmodernism was developed by academics in the 1950s-1960s in a reaction against scientific efforts to explain reality objectively.  It was a fashionable and dominant mode of analysis in many academic circles in the last decades of the twentieth century.  Its appeal may be explained partly by the cultural vertigo that can result during periods of rapid social change, where established values may seem to have rapidly eroded and a steady stream of new technological advances produces large changes, heightening uncertainty about the future.”

 We’ll come back in a future post to the issue of “cultural vertigo”, because that’s also providing difficulties for many companies (not only in the energy industry), but crucial to today’s post is the “reaction against scientific efforts to explain reality objectively”.

 This has resulted in a widespread acceptance of the notion that there is no such things as absolute truth and that “what is true for you need not be true for me”.  Confronted with such an attitude, people such as the engineers in energy companies often have great difficulty in relating to this world view.  After all, their training has all been very fact-based: either the bridge that you have designed will withstand the loads placed upon it, or it won’t.  Theirs is often, of necessity, a relatively black and white world which has difficulty in dealing, not just with shades of gray, but with completely different colour schemes.

 Coming on top of the end of the Age of Enlightenment, this postmodernism is therefore an additional reason why stakeholders will no longer be convinced by being educated by “the facts”, since, as I said earlier, what is true for you need not be true for me.

 How to move forward in such a world?

 When I got married almost thirty years ago, my father-in-law gave an excellent speech.  Among the many pearls of wisdom that he shared that day was the following:  “Peter, every so often, you’re going to have to sit your wife down and give her a damn good listening to”.  It was wise advice and, whenever I’ve failed to do that on significant matters (or just life in general), I’ve usually got myself into situations where I had to end up doing it anyway.

 Energy companies need to do the same with those who are concerned about their activities.  Shouting “the facts” from corporate websites and brochures may make you feel like you’re doing something, but it’s seldom achieving anything.

 Instead, time spent really communicating (listening at least as much as talking), building relationships, walking a mile in each other’s shoes and looking for areas of common interest will be increasingly essential to success.  It may feel costly, time-consuming and lacking in the reassurance of foreseeable process, but the old ways, which had the appeal of misleadingly seeming to offer speed, cost-effectiveness and certainty, simply aren’t working any more.

 Consultancies like Hill+Knowlton, as they work with their clients to create the external relationships and understanding which enable their clients to succeed, are increasingly going to be in the conflict resolution business.

 Next, living in the Internet Age….

There are several reasons, many connected to the broader environment in which such companies are working.  Some of these reasons have been more discussed than others, but we’ll look briefly at some of them in this and subsequent posts.

The first of these is an epochal change.  We’re living at the end of the so-called Age of Enlightenment, which has lasted about 300 years and which was based on the primacy of fact and reason, rather than faith or superstition; a world which was underpinned by the advance of knowledge based on the scientific method.  In such an Age, feelings mattered less than facts.  Arguments could be won with such statements as “that’s just emotion, the facts are….”.

We’re now living in an age in which emotion has once again become acceptable as a means of reaching judgements and decisions.  The assertion that “your facts don’t change my feelings” is now intellectually respectable in a way that would not have been the case as recently as thirty years ago.

This is a much harder world in which to operate for fact-based enterprises in controversial industries, such as energy companies.  Such companies are typically run by people with very fact-based backgrounds (such as engineers and accountants), for whom “feelings” are typically very subservient to their interpretations of “the facts” of an issue.

Since such people as usually convinced by facts, they assume that others will be similarly convinced once the facts are known and so they communicate in emotionally fraught situations by throwing more facts into the argument.  We know from our personal experience that this is seldom, if ever, a successful approach to dealing with people who are upset about something, but this industry often persists in such behaviour.

It’s not that the facts have ceased to matter, but the route to gaining a hearing for them needs to pass through addressing the emotions of an issue first.  As the old saying goes, people need to feel they’ve been heard before they’re will to listen and we need companies to develop EQ as well as IQ.

A very instructive example of this, from outside the energy industry, can be seen in the contrast between tobacco and alcohol.  Faced with rising concerns some years ago about the side-effects of the use of their products, the two industries reacted very differently.

In the case of tobacco, their approach to the issue was entirely fact based (and litigious).  The alcohol industry, on the other hand, acknowledged the issue and worked with NGOs such as Mothers Against Drunk Driving to address people’s’ emotional concerns about the damage done by alcohol.

The result, decades on, is that in most of the developed world, people having a drink together remains a widely-accepted social practice.  Smokers, on the other hand, have become social pariahs, banished from polite company.

Next, living in the Post-Modern Age…

Glen Hodgson, a Director with Hill + Knowlton Strategies based in Brussels and Stockholm, writes about new legislation which will affect the market for biofuels in Europe and therefore create opportunities as well as threats for operators, producers and users.

What is the issue?

The European Commission proposed in October 2012 new legislation on the indirect land use change (ILUC) effect of biofuels intended to minimise the climate impact of their production. In this context, the proposed rules may lead to new classifications and subsidy streams for sources of biofuels. If adopted in its current form by the European Parliament and the EU Council, this will limit the amount of food crop-based biofuels and bioliquids that can be counted towards the EU’s 10% target for renewable energy in the transport sector by 2020 to a 5% level. This is clearly of concern for the whole industry.

 The European Commission also proposes double- and quadruple-counting the contribution of some low-ILUC biofuels towards the EU’s 20% emissions reduction target for 2020, one of the aspects of the proposal which had proved controversial within the Commission prior to its publication. In general, land-using second-generation biofuels are intended to be double-counted, while non-land-using second-generation biofuels are to be quadruple-counted due to their low-ILUC factor.

Timing and next steps

The proposal has been adopted, but work in the European Parliament and Council of Ministers has not yet begun. There is therefore a great deal of scope in shaping opinions at the national and Brussels levels to protect business interests. This also opens the possibility of setting up a biofuels debate platform which would support and complement future lobbying towards the European Parliament and the EU Council around the ILUC legislative proposal. This could establish a dedicated online channel through which to directly engage targeted decision-makers, influencers and media as a transparent means to advance policy objectives and educate on key concerns. Furthermore, such a dynamic platform would also rapidly address misinformation and showcase relevant videos, while supporting targeted offline engagement and outreach activities. Clearly, the time is right and there is a need to re-energize the debate and make it more visible ahead of this year’s first-reading negotiations in the Parliament and Council.

As I just recently relocated to New York City from Berlin, Germany, this year’s Super Bowl was my first to watch since I moved to the United States. I do not particularly care for American Football, but the sporting event, arguably America’s most important each year, is worth watching for the commercials alone. (Which by the way were not that great this year, writes Stuart Elliott.) If you tuned in, however, you witnessed a colossal power failure which interrupted the game for more than half an hour. Maybe it’s the German in me, but if this does not trigger a national debate on energy infrastructure in the U.S., I think the outlook may remain very grim.

William Galston of the Brookings Institution just recently argued that the crumbling U.S. infrastructure has real economic costs. While he is mostly referring to roads and train tracks, ports and airports, this fact is particularly obvious regarding the electricity supply. In our information age, almost all value is created with the help of electricity. A 2006 study by researchers of the Carnegie Mellon Electricity Industry Center states that the average electricity consumer in the United States has to deal with 214 minutes without power per year compared with 29 in The Netherlands, 6 in Japan, and 2 minutes in Singapore. In the U.S., the study shows, the average electricity customer loses power once every 9 months. In Japan, it is once every 20 years. My guess is this gap has only grown, despite the Fukushima nuclear disaster.

Faced with the Super Bowl power failure, E. J. Dionne, a journalist and professor at Georgetown, quickly started the debate on national infrastructure with a tweet, while Stephen Walt, a Harvard Professor, made the point that the power outage will (further) eclipse American power. A country that cannot keep the lights on during its most important sports event may have trouble maintaining its status as a global superpower. Brand Plumer of the Washington Post then started the serious debate on infrastructure, asking whether a smart grid would have prevented the black out.

We can only hope that this debate continues.

It’s been nearly two weeks since Barack Obama was inaugurated for his second term, and Beyoncé is still in the headlines. “Give the girl a break…Wouldn’t you use a backing track?” Please….surely this kerfuffle has more to do with her own PR people looking to drum up anticipation for a little gig she’s got on Sunday and she wants to beat someone else’s record? I digress….

The US got a new Diplomat in Chief today in the shape of former Senator John Kerry. If the past two weeks are anything to go by, he’s got his work cut out for him.

Africa’s moving back in to the agenda (has the Asian pivot distracted State Department, I wonder?). France has taken the lead in Mali, but the UK quietly sent troops in this week. Will America follow? I was surprised at how quiet the White House and Foggy Bottom were during the siege at In Amenas, but Secretary Kerry said in his confirmation hearing that embassy security and stability in the Maghreb would be priorities for him.

Syria’s headed in to the third year of civil war; 65,000 have died and violence keeps dancing on the border with Turkey. And this week, Israel got involved.  It will be interesting to see how that plays out in the next few weeks.

Later this month: picking back up with the “talks” with Iran with the UN Security Council (and Germany)….or they might happen, if those Western Powers would just stop being so darn tricksy. Potentially good timing – “defiant” Iran has just announced they’re upgrading their enrichment capabilities at Nantaz. (NB: I think calling Iran “defiant” is like calling one of these “potentially dangerous”).

Egypt continues to be rocked by instability, and more than 50 people have died after riots, which followed a ruling about…riots. Say what you will about President Morsi, he was able to step up when it came to negotiating with Hamas and Israel last autumn. Can Secretary Kerry rely on him to focus on “other people’s problems” when he’s got so much on his own plate? And would it be right to do so?

And that brings us back to Israel…Kerry has historically been a supporter of Israel. They just had elections too, and while Prime Minister Netanyahu is still in power, he’s weakened, and some far right parties have made gains. This may not bode well for the Palestinian peace process, or indeed for the situation with Iran.  I’m not a foreign policy expert, or a political expert, but I can’t help but wonder if Kerry’s appointment was a subtle olive branch to Prime Minister Netanyahu that the US is still onside, despite the less-than-cuddly relationship between the Prime Minister and President Obama.

Secretary Kerry has big shoes to fill, and has to fill them at an increasingly fraught time for geopolitics and international stability, and to be the international face for a country that needs to redefine its role in world affairs. I shall be watching with interest…