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Goodbye To Cheap Air travel

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Popeye Express

Shares in British Airways rose sharply this morning after preliminary results for the 12 months to March revealed annual pre-tax profits up by 44.5% to £883 million. These excellent figures are bucking the trend in airlines around the world, and particularly in the US, where the airline sector as a whole posted an $11 billion loss in the first quarter of this year. BA warns that the next year will be “challenging”, in the light of continuing economic slowdown and oil prices showing no sign of a significant retreat below the $125 a barrel mark. The airline expects its fuel costs for the past year to have been more than £2 billion, around a quarter of its cost base, rising to £2.5 billion in the coming year.

In the last 90 days, jet fuel prices have jumped 38%. As oil has hit record high after record high, fuel costs have exceeded labour costs for many airlines, accounting for as much as 40% of operating expenses. Airlines can’t set their ticket prices high enough to keep their businesses in the air. According to Delta CEO Richard Anderson, ticket prices would have to rise 15-20% just to cover increased fuel costs. Of 769 million passengers on US flights last year, many are thought to be on non-essential trips which will be cut back as times get harder.

The budget carriers’ business models have always relied on the thinnest of margins, and fuel price rises have so far caused eight airlines to go under, with more tipped to follow. One of them, ATA Airlines, left US soldiers stranded in Iraq, unable to get home to Vermont as the company went bankrupt.

The larger carriers have responded to mounting fuel costs by eating into their cash reserves to keep prices artificially low. At its current spend of $3.3 million a day, American Airlines could have spent its $5 billion cash reserves, the largest in the industry, in four years. There’s only limited scope for cutting costs by tricks such as economising on maintenance, taking safety risks like flying with inadequate fuel reserves, and skimping on customer service. Carriers are hoping that mergers will ensure their survival, at least for a while. Northwest Airlines and Delta have a proposed merger under review, with United Airlines thought to be in talks with both Continental Airlines and US Airways.

Cheap air travel is almost certainly doomed. Depending on how you feel about flying, that may or may not be the downside. The upside is that rail travel is bound to gain market share in the years ahead. Rail is the cheapest and most fuel-efficient form of transport, using a third less fuel than air for personal travel, and as little as 3% of the energy for freight. Rail companies have recently been attracting substantial investments from some of the wealthiest US investors:

These are all freight companies, the North American passenger business having withered in the face of cheap, aggressively-marketed air travel, but there is good reason to expect that passenger services will follow growth in freight traffic. In their book ‘Transport Revolutions: Moving People & Freight Without Oil’, Richard Gilbert and Anthony Perl predict that in 2025, no more than 25 airports will be operating. Electric powered transportation and rail will be the standard transport options. In a post-peak oil world, rail is probably the longest safe bet one could possibly make.

Written by Pete Smith

May 16, 2008 at 12:31 pm

Honey Bees

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Flowering currant with camera-shy beesThe flowering currant in our front garden is in full bloom, and is covered with bees, although you’d never know it from the photograph. Sadly, they seem to be desperately camera-shy, after a dozen attempts I gave up trying to get a shot with even a single bee in it. You’ll just have to take my word for it.

The way things are going, it may not be long before bees are just a memory in our garden. Colony collapse disorder (CCD) continues to be an unsolved mystery in the United States (‘The Vanishing Bee‘), and growing concerns are being expressed that within ten years the honey bee may have all but disappeared in Britain (‘Mystery virus killing bees‘). At a conservative estimate, one third of the UK’s agricultural and horticultural output depends upon wild pollinators, chief of which is the honey bee.

You can always tell that an idea has captured the public’s imagination when somebody makes a movie about it. ‘The Day After Tomorrow’ made a lot of money on the back of climate change fears. ‘Flood’ deservedly sank like several stones in spite of its release coinciding with a North Sea storm surge and fears of flooding. Now, M. Night Shyamalan’s latest blockbuster ‘The Happening‘ postulates that CCD may just be the first phase in an ecological shift that will destroy the human race.  Gaia meets ’28 Days Later’.

Whether this entertaining hypothesis is true or not, we’re all probably going to be up a gum tree without a paddle before long. I foresee a new career as a fruit tree pollinator.

Written by Pete Smith

April 21, 2008 at 12:33 pm

Commitments? What Commitments?

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Guardian front page
“Britain seeks loophole in EU green energy targets” trumpeted The Guardian yesterday, as if this is something new that hasn’t been on the cards for months. Back in August, newspapers reported that Government ministers had been told that Britain has no hope of meeting its commitment to renewable energy and should consider ways of getting out of it (‘Wriggle out of challenging energy targets, ministers told‘).

What is new this time round is that the UK has formally broached the idea of changing the way that EU targets are calculated to make them easier, and cheaper, to meet. At a closed session of the Energy Council of Ministers, Baroness Vadera, Parliamentary Under-Secretary of State for Business and Competitiveness, made two proposals:

  • British investments in renewable energy anywhere in the world should count as part of UK’s effort
  • All EU countries should be allowed to count carbon “saved” from coal-fired stations fitted with equipment that captures harmful greenhouse gas emissions. The electricity generated by this “clean coal” would then count as renewable energy and go towards UK national targets.

The logic behind this doublethink is pretty clear: Britain is desperate to postpone or scale back investment in renewable energy projects. This reflects a significant shift towards nuclear energy. Energy Secretary John Hutton has this week spoken out in favour of a major expansion of the British nuclear and coal industries, going beyond merely replacing existing capacity. President Sarkozy’s state visit confirmed that the French nuclear industry will be involved in developing four British nuclear power stations, with the potential for more to follow.

All this costs money, in spite of the mantra of ‘zero subsidy’. The government’s touching faith in the power of the market has led to private investment in renewables going abroad. Last December we reported how Renewable Energy Holdings, the AIM-listed UK green technology company, was investing in a Polish wind farm (‘Renewable Energy‘). From the private investment angle, this makes perfect financial sense: cheaper land, lower construction costs, a faster and more liberal planning system. The government’s problem is that it’s saddled with targets which it’s assuming will be fulfilled by the private sector. If market forces drive investment in renewables to other EU member states, or beyond, how can domestic targets be met? Small wonder that the government is looking to renegotiate its obligations.

But I’d still like to know how they think they can convince anyone that burning coal counts as renewable energy.

Written by Pete Smith

March 30, 2008 at 8:19 pm

Baptists Toughen Environmental Stance

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Green CrossHot on the heels of the Catholic Church including environmental pollution on its list of mortal sins for the 21st Century , the Southern Baptist Church declares that it has been “too timid” on environmental issues. Senior members of the Southern Baptist Convention have signed ‘A Southern Baptist Declaration on the Environment and Climate Change‘, which shows a growing sense of urgency about climate change even within groups that once dismissed climate change as a liberal con-trick. The Declaration lays out four “statements for consideration”:

  • Humans Must Care for Creation and Take Responsibility for Our Contributions to Environmental Degradation
  • It Is Prudent to Address Global Climate Change
  • Christian Moral Convictions and Our Southern Baptist Doctrines Demand Our Environmental Stewardship
  • It Is Time for Individuals, Churches, Communities and Governments to Act

The signatories have acknowledged that not all Christians accept the science behind global warming. Fellow believers are not asked to back any proposed solutions that would violate Scripture, such as advocating population control through abortion. However, current evidence of global warming is “substantial” and the threat is too grave to wait for perfect knowledge about whether, or how much, people contribute to the trend.

“Our cautious response to these issues in the face of mounting evidence may be seen by the world as uncaring, reckless and ill-informed. We can do better.”

I couldn’t put it better myself. I never thought I’d find myself on the same side of the aisle as a conservative Christian group, but as Francois de La Rochefoucauld said “The only thing that should surprise us is that there are still some things that can surprise us.” I feel much more comfortable with the Baptist position than that put forward by the loonies at the Heartland Institute. Their ‘Manhattan Declaration On Climate Change‘ states “Global warming is not a global crisis” and demands that “all taxes, regulations, and other interventions intended to reduce emissions of CO2 be abandoned forthwith”.

The Baptist denomination is the largest Protestant group in the United States with more than 16 million members. I wonder how many members of the Heartland Institute they can count amongst their flock.

Written by Pete Smith

March 11, 2008 at 9:55 am

Business As Usual During Alterations

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Business as usual

After two years, The Coffee House is going through its biggest shake-up yet. In November we moved over to our own self-hosted domain running WordPress. Sadly, after six weeks my colleague Matt has decided that our viewing figures are too low and has taken himself back to the old site.

I have too much time and effort invested in this site to abandon it and go back, so Matt and I have gone our separate ways. The Coffee House will continue under Matt’s direction at environmentdebate.wordpress.com, while I shall carry on here under the site’s new name, Change Alley.

Our original name evoked the role of the coffee houses in the City of London as “places to gather and debate the issues of the day”. My new title echoes that history. Change Alley is a small passage in the City, just north of Lombard Street, that still exists today. In the 17th Century it was the site of Jonathan’s and Garraway’s coffee houses, which provided venues for the exchange of stocks and commodities, and eventually evolved into the London Stock Exchange. Change Alley will continue to offer a forum for debate and exchange of information on all matters environmental.

Best wishes for 2008.

Written by Pete Smith

January 1, 2008 at 11:04 pm

Climate Change Too Hot To Handle?

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It’s official, we’re in trouble again. Or still. You’d be forgiven for thinking the latest report from the International Panel on Climate Change (IPCC) is more of the same old same old. It is. The Synthesis Report of the IPCC Fourth Assessment Report is effectively a summary of three papers published earlier this year, and is intended to lay the foundations for worldwide agreement on emissions. You’ll have heard much of this before:

Snow and ice melting, sea levels rising by up to 0.59m by 2100, Arctic sea ice shrinking by 2.7% a decade, heatwaves and hurricanes increasing, human greenhouse emissions up by 70% between 1970 and 2004 and set to double by 2030, atmospheric CO2 at its highest level for 650,000 years, up to 30% of species at risk of extinction.

Despite all the doom and gloom, there’s still a surprising degree of confidence that if decisive action is taken now we can mitigate the worst of the projected impacts. In particular, not only do we have current or imminent technologies that will enable us to do this, but prompt action will be cost-effective and will have a minimal economic downside. In other words, it’s possible and it’s affordable.

It seems the UK government is having trouble balancing the books to make this happen. On Saturday the Guardian reported that DEFRA, the Department for the Environment, Food and Rural Affairs, is planning reductions in key environmental services to generate savings of at least £300 million. The cuts are driven by the huge costs of a series of recent disasters such as foot and mouth disease, severe flooding, and mismanagement of agricultural subsidy reforms. All fifty DEFRA agencies are expected to be affected, hitting areas such as National Parks, sustainable development, forestry, fisheries, energy saving, waste management, environmental protection and, last but not least, the fight against climate change.

Coinciding with the publication of the Climate Change Bill and constant re-affirmation of emissions commitments, the conclusion must be that the government is struggling to meet its targets. Concentrating efforts on climate change and neglecting wider environmental obligations is bad news for nature conservation, with Natural England facing budget cuts of 30% for new conservation projects. Spending cuts are under consideration for some of the country’s most valuable wildlife sites.

It’s time that someone realised that it’s not just about carbon, stupid. Making environmental policy around a single issue is short-sighted and short-term thinking. We must continue to support our natural resources, our habitats and wildlife, to keep them robust and resilient against the effects of climate change. Without a holistic view of the environment , we may win the battle to reduce carbon emissions, but we will lose our natural heritage. A landscape consisting of nothing but windmills set in fields of biofuel source crops is not somewhere I would want to call home.

Summary for Policymakers of the AR4 Synthesis Report

“Climate change department faces £300 million cuts” (Guardian)

New Triple Hybrid Power Pack Launched

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Shares in Traction Technology plc (LSE:TRAC) rose sharply on the London Stock Exchange today, after the company announced the launch of its new ‘TRIBRID’ product range for bus operators. TRIBRID is a power pack that has the ability to draw on three separate power sources for use in bus engines.
Traction Technology Plc is a designer and deliverer of environmentally friendly, low emission Series Diesel Electric Hybrid engine systems. The TRIBRID automatically manages power between a diesel power unit, conventional batteries and supercapacitors.
Supercapacitors are very high value capacitors that can store much larger amounts of energy, to the point where they can act like batteries and propel the bus. They are capable of millions of charge and discharge cycles at high currents which make them highly suitable for hybrid vehicles. The TRIBRID, by blending these three sources of energy, optimises the efficiency of the bus, varying the horse power, energy usage or battery capacity of the bus to suit all requirements.

Written by Pete Smith

July 11, 2007 at 12:07 pm

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