December 2011

Climate Change

New research in the journal Nature Climate Change, has suggested that without an early and dramatic cut in greenhouse gas emissions we are unlikely to hit the target to remain below an increase of 2C since pre-industrial levels. The target endorsed by so many nations, is already 'slipping out of reach'. Whether the 2C limit is achievable depends partly on climate sensitivity but predominantly on complex socio-economic dynamics. All this just in time for the ongoing COP17 climate conference in Durban.

Solar

Unfortunately the government has made the not so environmentally friendly decision to halve the feed-in tariffs (FITs) for solar energy. The subsidy pays householders to generate electricity from solar power at 43p per kilowatt hour and is to be cut from 12th December. Solar panel makers and installers are saying it will cost thousands of jobs, the Renewable Energy Association estimate that the industry will lose 15-20,000 jobs. A PwC Director commented that smaller operators are likely to struggle and go under, which could in turn lead to a more sustainable and competitive long term scenario. There has been a knock on effect for Enterprise Investment Schemes (EIS). Many of the funds are closing early as a result while some have claimed that they will not be affected and can maintain targeted returns as long as the government doesn't move the goalposts again.

Marine outshines solar!

Chris Huhne has increased the amount of tax payer support for marine renewable energy – tidal and wave – over the likes of solar and onshore wind. The marine energy subsidy rose from two ROCs to five; offshore wind, the most expensive low-carbon technology, received a slight increase.

Tom Murley at HG Capital, one of Britain's biggest wind developers, said the revamp was 'appropriate'. He commented 'we are in a phase with renewable where they are moving out of their infancy and toward adulthood. It's on the industry to drive costs down. The cost of turbines has fallen by 20% to 30% in the past three years'.

Over the last quarter we also heard that Solyndra, a large solar panel firm, went bust leaving Sir Richard Branson and the billionaire family behind Wal-Mart, potentially facing a £930m investment loss.

Recycling

Valpak have been highlighted for a management buy-out and have now also attracted outside interest. It is the biggest recycling consultancy in Britain with clients like Tesco, Coca-Cola, BP and Unilever. The main reason given for the move was the change in government policy to focus more on 'voluntary agreements' and 'responsibility deals' as opposed to further regulatory legislation, which has traditionally been the core focus of Valpak's work. The government has committed to consulting on 'increased' packaging recycling targets for 2013-17 but has stressed that the scale of the increase will depend on how affordable it is to business.

SRI

Bad news for the six strong team at Henderson where a rationalisation of the business, following two recent high profile acquisitions, has forced the decision to switch from using a dedicated in-house SRI research team in favour of external provider EIRIS and relying on a screening system. The three global funds managed by the team, the Global Care Managed, the Global Care Growth and the Industries of the Future fund, will be run by Henderson's global equity team. The Global Care UK Income fund will come under the UK value and income team. Earlier this month Henderson reported that total assets under management fell by £9bn. However, this is rather unexpected and bad news for the SRI sector who will recognise that a long established and talented team now has to look at its options. Alpine Executive has supported the development of this team who recently won leading SRI Fund Manager in 2011 Thomson Extel Awards.