ANNUAL REPORT FLIPPING BOOK.pdf

and Agricultural Expertise.

Brown & Co: Residential, Commercial

CLIMATE, THE ENVIRONMENT AND SUSTAINABILITY brown-co.com

commercial and residential property. We have made some H[FLWLQJ GHYHORSPHQWV ZLWKLQ WKH ODVW \HDU ZKLFK KDYH EURXJKW JURZWK WR RXU EXVLQHVV 0RVW QRWDEO\ WKH %HUU\ 0RUULV $OH[DQGHUV PHUJHUV JLYLQJ XV QHZ RIÀFHV LQ %DQEXU\ DQG +XQWLQJGRQ DQG WKH QHZ $JUL $0 MRLQW YHQWXUH ZLWK 'H[LRQ Capital. We now have over 200 employees in our team at %URZQ &R EDVHG DFURVV 8. DQG RYHUVHDV RIÀFHV We remain true to our heritage and the values that have XQGHUSLQQHG RXU VXFFHVV DV ZH JURZ RXU WHDPV DQG H[SHUWLVH to best support our clients businesses and investments.

Welcome to our view of 2015, focussing on climate and the HQYLURQPHQW LVVXHV ZH EHOLHYH DUH JRLQJ WR EH NH\ LQÁXHQFHUV across the market in the year(s) ahead. Within this publication, we have an interesting collection of articles to stimulate thought and discussion. Oliver McCentyre from Barclays has given us an interesting insight into farming and ÀQDQFH , DP DOVR YHU\ JUDWHIXO WR RXU RWKHU H[WHUQDO FRQWULEXWRUV -DPHV %URZQ D SODQW SDWKRORJLVW DW -RKQ ,QQHV 'U 6WHSKHQ 'RUOLQJ IURP 7KH 8QLYHUVLW\ RI (DVW $QJOLD·V IDFXOW\ RI VFLHQFH 0DUWLQ 6OHHXZ IURP $GDSW /RZ &DUERQ *URXS DQG 0DWWKHZ 5LYHUV IURP 'UD[ 7KH\ DOO JLYH WKHLU XQLTXH LQVLJKWV LQWR WKH differing impacts sustainable resources and climate have in relation to property or agriculture. $V HYHU WKH SURSHUW\ DQG DJULFXOWXUDO PDUNHW LV FRQWLQXDOO\ HYROYLQJ $W %URZQ &R ZH OLNH WR VHH RXUVHOYHV DV SURDFWLYH and creative within our core sectors of agriculture, land,

Charles Whitaker Managing Partner

INSIDE KNOWLEDGE Finance, Farming & Agriculture Oliver McCentyre, Barclays 04-05

06-07

Sustainability and Competitive Advantage 0DUWLQ 6OHHXZ $GDSW /RZ &DUERQ *URXS The Case for Sustainable Design -RQDWKDQ 6PDOHV ([HFXWLYH &KDLUPDQ RI %H\RQG *UHHQ Commercial Property and the Environment 1LFN 'DZHV %URZQ &R Sustainable Biomass, a Unique Role in the UK Energy Mix 0DWWKHZ 5LYHUV 'UD[ Farming and Science in Interesting Times

08-09

10-11

12-13

14-15

-DPHV %URZQ -RKQ ,QQHV Water - A Growing Concern 6LPRQ :HDUPRXWK %URZQ &R ([WUHPH :HDWKHU (YHQWV DQG WKHLU LQÁXHQFH RI JOREDO DELOLW\ WR SURGXFH FURSV 'U 6WHSKHQ 'RUOLQJ 8($ The Integrated Challenge: Climate, Agriculture and Food Security $GDP 2OLYHU %URZQ &R Brown & Co 2014 Highlights

16-17

18-19

20-23

24-25

Oliver McCentyre 1DWLRQDO $JULFXOWXUDO 6SHFLDOLVW %DUFOD\V

FINANCE, FARMING AND AGRICULTURE

(QYLURQPHQWDO LVVXHV ZLWKLQ WKH IDUPLQJ sector have been at the core of recent policy decisions, none more so than its high ranking ZLWKLQ WKH &$3 UHIRUP ZKLFK UHVXOWHG LQ WKH QHZ %DVLF 3D\PHQW 6FKHPH :LWKLQ WKH agricultural sector, the emphasis on matters environmental are both pressing in the minds of the policy and decision makers, as well as the general population. With the strength of thought behind it, its inclusion through WKH ¶*UHHQLQJ· PHDVXUHV RI %36 LV RI OLWWOH surprise and whatever your view on it is, it ORRNV OLNH LW LV KHUH WR VWD\ )DUPHUV DW ÀUVW felt under pressure and had concerns over

what this would mean for their businesses, KRZHYHU $+'% UHFHQWO\ SURMHFWHG WKDW DURXQG 80% of affected farms already comply to the ¶WKUHH FURS UXOH· 7KHUHIRUH LW ZRXOG DSSHDU WKDW IRU WKH PDMRULW\ WKH PHDVXUHV VKRXOG KROG QR IHDUV DQG LQGLFDWH WKDW 8. IDUPLQJ LV already embracing the environmental aspects of their business.

4 %URZQ &R

$QQXDO )RFXV 5HSRUW

“Over 60%of farmers we talked to have either already changed their farming patterns or are currently considering doing so. This adaptability is the key to ensuring a business can survive”.

$QRWKHU NH\ LQÁXHQFH RQ WKH IDUPLQJ VHFWRU is the weather and neither individual farmers QRU WKH 8. LQGXVWU\ DV D ZKROH FDQ KDYH DQ\ control of it. What farmers can do is adapt and change to climate patterns which could include livestock management systems, changes in cropping, or complete rotations. $ TXHVWLRQQDLUH FRPSOHWHG WKURXJKRXW WKH VXPPHU E\ %DUFOD\V $JULFXOWXUH DW LQGXVWU\ shows and events has shown that over 60% of farmers we talked to have either already changed their farming patterns or DUH FXUUHQWO\ FRQVLGHULQJ GRLQJ VR 7KLV adaptability is the key to ensuring a business can survive when something not within its control changes, be that as an instant reaction to the direct results of the weather, VXFK DV ÁRRGLQJ RU ZKHQ WDNLQJ D ORQJ WHUP strategic view of overall business operation ZKHQ WKH ÁRRGLQJ FRQWLQXHV \HDU DIWHU \HDU 7KH KLVWRULFDOO\ ORZ EDVH UDWH LV UHSRUWHG WR EHQHÀW 8. ERUURZHUV DW SUHVHQW DQG WKH IDUPLQJ LQGXVWU\ LV QR GLIIHUHQW ZLWK total facilities to the industry in the Bank of (QJODQG ÀJXUHV UHDFKLQJ RYHU…ELOOLRQ :LWK WKH FRVW RI ERUURZLQJ DW DQ DOO WLPH ORZ many farmers have taken the opportunity to UHOHDVH VRPH HTXLW\ IURP WKHLU DVVHW EDVH and invest in the infrastructure or size of their IDUP $V WKH JHQHUDO 8. HFRQRP\ JURZV DQG VWUHQJWKHQV IRUHFDVWV DUH HYHU FKDQJLQJ RQ

when the base rate will begin to increase. However, managing the potential for an increase in base rate, and therefore overall interest payments, and knowing how that will affect your business is one of the key calculations to ensure the level of borrowing LV VXVWDLQDEOH 7KLV DQDO\VLV VKRXOG EH XQGHUWDNHQ LQ MXVW WKH VDPH ZD\ \RX PLJKW apply a sensitivity analysis to milk or grain price variations, when you have little control RYHU VRPHWKLQJ LW LV SUXGHQW WR NQRZ KRZ ÁXFWXDWLRQV ZLOO DIIHFW \RXU EXVLQHVV DQG \RXU FDVKÁRZ 2YHUDOO 8. DJULFXOWXUH LV D YLEUDQW DQG FXWWLQJ HGJH LQGXVWU\ VRPH RI WKH LQQRYDWLRQ LQ WKH world of farming in recent years is a far cry from the perception of those with a more traditional view of our industry. Many believe LW LV D VWHDG\ VORZ EXUQLQJ VHFWRU ZKLFK LQ production cycle terms it can be. However, URERWLF PLONLQJ ÀHOG PDSSLQJ WR GHWHUPLQH seed, spray and fertiliser rates and electronic climate control of pig and poultry buildings, to name but a few, are an indication of the innovation and technology the industry LV HPEUDFLQJ *UHDWHU DZDUHQHVV RI WKH constant modernisation of the industry will not only drive investment within the farming community, but also help to attract the farmers and innovators of tomorrow.

8. $JULFXOWXUH cannot ignore the environmental impact on its fortunes, having to respond to both environmental SROLFLHV IURP WKH (8 and more localised, SURÀW LQÁXHQFLQJ

weather patterns. Resilient as ever, the sector adapts to accommodate all of this.

,UUHVSHFWLYH RI DQ\ FOLPDWH RI HQYLURQPHQWDO issues, agricultural businesses must be assured that they are fully funded in order WR RSHUDWH HIÀFLHQWO\ DQG DW WKH VDPH time be sure of the affordability of this IXQGLQJ UHTXLUHPHQW 7KLV DOO FRPHV DV D FRQVHTXHQFH RI PRQLWRULQJ DQG EXGJHWLQJ ÀQDQFLDO UHTXLUHPHQWV DQG WKH FRVWV thereof, both at the current time and into the future.

Philip Dunn Partner 01652 654833 philip.dunn@brown-co.com

%URZQ &R

$QQXDO )RFXV 5HSRUW 5

Martin Sleeuw, BSc(Hons) MRICS Commercial Manager $GDSW /RZ &DUERQ *URXS

SUSTAINABILITY AND COMPETITIVE ADVANTAGE

The discussion on sustainability in the built environment is being re-framed, from talk of burden to that of opportunity. While legislation and regulation have been the key drivers to date, the market forces of risk management and occupier demand for sustainable EXLOGLQJV DUH H[HUWLQJ LQFUHDVLQJ LQÁXHQFH

:LWK WKH 8.·V ORZ FDUERQ DQG HQYLURQPHQWDO goods and services sector currently worth LQ H[FHVV RI…ELOOLRQ WKLV UHSUHVHQWV a tremendous business opportunity. *OREDOO\ WKLV VHFWRU LV ZRUWK LQ H[FHVV RI …WULOOLRQ HVWLPDWHG WR UHDFK…WULOOLRQ LQ ZLWK H[FLWLQJ H[SRUW RSSRUWXQLWLHV for our leading knowledge, innovation and HQWUHSUHQHXUVKLS ,Q DGGLWLRQ WR FOHDQ HQHUJ\ supply, opportunities abound on the demand VLGH RI WKH HQHUJ\ HTXDWLRQ GHOLYHULQJ HQHUJ\ HIÀFLHQF\ RQ DQ LQIUDVWUXFWXUDO VFDOH

)XQG $3 DQG RQH RI (XURSH·V ODUJHVW DVVHW PDQDJHUV $PXQGL DQQRXQFHG WKDW LW ZLOO UHGXFH WKH FDUERQ IRRWSULQW RI 86 billion of investments worldwide. Meanwhile, Rockefeller committed to divest from fossil fuels, and the insurance industry announced its commitment to increase its investment in “climate smart development” by a factor of WHQ WR FLUFD 86 ELOOLRQ E\ ,QYHVWRUV such as these are calling for more investible FDUERQ UHGXFWLRQ SURMHFWV WR VDWLVI\ GHPDQG DV a result of this massive reallocation of capital.

7KH UHFHQW UHSRUW 7KH 1HZ &OLPDWH (FRQRP\ E\ 7KH *OREDO &RPPLVVLRQ RQ WKH (FRQRP\ DQG &OLPDWH FR FKDLUHG E\ /RUG 6WHUQ concluded that, “countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate FKDQJH 7KH FDSLWDO LV DYDLODEOH DQG WKH SRWHQWLDO IRU LQQRYDWLRQ LV YDVWµ 7KLV ZDV H[HPSOLÀHG DW WKH 81 &OLPDWH 6XPPLW LQ 1HZ

6 %URZQ &R

$QQXDO )RFXV 5HSRUW

DWWUDFW DQG UHWDLQ WKH EHVW VWDII ¶*HQHUDWLRQ <· ZDQWV WR ZRUN GLIIHUHQWO\ DQG LV SDUWLFXODUO\ DWWXQHG WR WKH EHQHÀWV RI VXVWDLQDEOH ZRUNSODFHV 6R WKHUH LV DQ RSSRUWXQLW\ WR align with demand from this growing market segment. 5HFRJQLVLQJ WKLV RSSRUWXQLW\ 7KH (QWHUSULVH &HQWUH LV DQ H[HPSODU GHYHORSPHQW E\ WKH $GDSW /RZ &DUERQ *URXS XQGHU FRQVWUXFWLRQ DW WKH JDWHZD\ WR WKH 8QLYHUVLW\ RI (DVW $QJOLD SDUW IXQGHG E\ WKH (XURSHDQ 5HJLRQDO 'HYHORSPHQW )XQG %%65& 1RUZLFK 5HVHDUFK 3DUN %5( DQG 1HZ $QJOLD /(3 On target to achieve the highest sustainability VWDQGDUGV RI %5(($0 2XWVWDQGLQJ DQG 3DVVLYKDXV FHUWLÀFDWLRQ ZLWK DQ H[FHSWLRQDOO\ low embodied carbon footprint through WKH LQQRYDWLYH XVH RI ORFDO ELR UHQHZDEOH PDWHULDOV 7KH (QWHUSULVH &HQWUH DLPV WR EH WKH 8.·V JUHHQHVW FRPPHUFLDO EXLOGLQJ ZKHQ RSHQ IRU EXVLQHVV LQ 6SULQJ $ERYH DOO ZH DLP WR FUHDWH DQ XQSDUDOOHOHG working environment, fostering collaboration DQG LQQRYDWLRQ DPRQJ VWDUW XSV DQG 60(V promoting new low carbon standards and creating new supply chains with resulting FLUFXODU HFRQRPLF EHQHÀWV Returning to market forces, the cost premium for sustainable buildings continues to decrease as designers, manufacturers, contractors and clients simply get better at GHOLYHU\ GULYLQJ HIÀFLHQFLHV DQG LQQRYDWLRQ through the supply chain. Recent evidence VKRZV WKDW %5(($0 ([FHOOHQW UDWLQJV IRU RIÀFHV FDQ EH DFKLHYHG DW FRVW SUHPLXPV RI WR ZKLOH LQ WKH (DVW RI (QJODQG Passivhaus dwellings are being constructed DW FRVW SDULW\ ,Q FHQWUDO /RQGRQ FRUSRUDWH occupiers are driving demand for sustainable

,Q WKLV FRQWH[W WKHUH LV QRZ YDVW SRWHQWLDO IRU FRPSHWLWLYH DGYDQWDJH ÀUVWO\ E\ GHYHORSLQJ VXVWDLQDELOLW\ DGYDQWDJHG SURGXFWV DQG services that better meet customer needs while delivering environmental and social EHQHÀWV DQG VHFRQGO\ WKURXJK VXVWDLQDELOLW\ driven productivity gains whereby carbon, HQHUJ\ DQG ZDWHU UHGXFWLRQ DFWV E\ SUR[\ DV D GULYHU IRU ZLGHU UHVRXUFH HIÀFLHQF\ GLUHFWO\ EHQHÀWWLQJ WKH ERWWRP OLQH $V ZLWK DQ\ EXVLQHVV SURSHUW\ FOLHQWV and consultants need to differentiate themselves from their competitors, and remain aligned with changing demand. Occupiers are increasingly knowledgeable DERXW WKH EHQHÀWV RI VXVWDLQDEOH EXLOGLQJV not only to the environment but also to themselves in terms of operating cost savings, brand values, corporate responsibility, occupier comfort, wellbeing, productivity, health and educational outcomes. 0DQ\ RI WKHVH EHQHÀWV FDQ EH ¶PRQHWLVHG· 7KH :RUOG *UHHQ %XLOGLQJ &RXQFLO·V UHSRUW 7KH %XVLQHVV &DVH IRU *UHHQ Building presents compelling evidence of the HFRQRPLF EHQHÀWV RI VXVWDLQDEOH EXLOGLQJV ,Q SDUWLFXODU LW FLWHV VWXGLHV OLQNLQJ QDWXUDO daylight and operable windows to increases LQ RFFXSLHU SURGXFWLYLW\ RI XS WR ,WV IROORZ XS UHSRUW +HDOWK :HOOEHLQJ 3URGXFWLYLW\ LQ 2IÀFHV FLWHV HYLGHQFH RI D FOHDU OLQN EHWZHHQ WKH GHVLJQ RI DQ RIÀFH and its impact on the health, wellbeing and SURGXFWLYLW\ RI LWV RFFXSDQWV (PSOR\PHQW UHODWHG FRVWV W\SLFDOO\ DFFRXQW IRU RI RIÀFH RSHUDWLQJ FRVWV WKHUHIRUH HYHQ VPDOO increases in employee health, wellbeing and SURGXFWLYLW\ FDQ UHVXOW LQ VLJQLÀFDQW ÀQDQFLDO EHQHÀW )XUWKHUPRUH HPSOR\HUV QHHG WR

buildings, while investors are managing the risk of accelerated obsolescence and GHSUHFLDWLRQ LQ YDOXH RI QRQ VXVWDLQDEOH buildings. With more effective information RQ VXVWDLQDELOLW\ EHQHÀWV IRU RFFXSLHUV WR consider, agents to promote and valuers to analyse, there is the potential for positive price signals to drive the development and UHWURÀW RI IXQGDPHQWDOO\ EHWWHU IXQFWLRQLQJ buildings.

Market sentiment has noticeably shifted. Occupiers are now shaping the demand for buildings which offer an improved working environment that

will stimulate staff, create better wellbeing DQG XOWLPDWHO\ OHDG WR LPSURYHG HIÀFLHQF\ ,Q WKH SDVW WKLV ZDV DQ DVSLUDWLRQ EXW DV the green agenda takes more of a centre stage, and as delivery costs reduce (and market rents improve), more sustainable buildings should become increasingly deliverable and commonplace, and we at %URZQ &R ZLOO EH DGYLVLQJ GHYHORSHUV DQG occupiers accordingly.

Nick Dunn BSc MRICS Partner 01603 598241 nick.dunn@brown-co.com

%URZQ &R

$QQXDO )RFXV 5HSRUW 7

Jonathan Smales ([HFXWLYH &KDLUPDQ RI %H\RQG *UHHQ beyondgreen.co.uk

THE CASE FOR SUSTAINABLE DESIGN

Over breakfast with the CEO of a huge and successful property company in one of the smartest West End restaurants, I was propositioned then later commissioned to conceive and then help design the ‘world’s most sustainable large-scale development’, for London...

8 %URZQ &R

$QQXDO )RFXV 5HSRUW

“We have come to the conclusion that to succeed (and with the conviction that we both must and can succeed) all key stakeholders in the process need to be prepared to do everything differently”.

,Q LWV FRQVXOWLQJ ZRUN %H\RQG *UHHQ VHHNV WR JLYH VSHFLÀF GHÀQLWLRQ WR DXWKHQWLF H[SUHVVLRQV RI WKHVH GH EDVHG WHUPV $QG after 15 years of this we have come to the conclusion that to succeed – and with the conviction that we both must and can succeed – all key stakeholders in the process need WR EH SUHSDUHG WR GR HYHU\WKLQJ GLIIHUHQWO\ $ WDOO RUGHU EXW OHW·V DW OHDVW EH VWUDLJKWIRUZDUG about the nature of the challenge. *UHDW VXVWDLQDEOH SODFHV DQG FRPPXQLWLHV QHHG D GLIIHUHQW XUEDQ IRUP ZLWK ZHOO connected streets, short blocks, a considered DSSURDFK WR WKH JURXQG ÁRRU SODQH RI entrances, corners and pavements, higher GHQVLWLHV DQG EHWWHU DPHQLW\ 7KH FOHYHU massing of buildings in what we call, ‘walkable QHLJKERXUKRRGV· ZLWK VWUHHWV GHVLJQHG primarily for people and cyclists is the route to very low carbon built environments. 6PDUW WHFKQRORJ\ JULGV DQG YHU\ ORZ FDUERQ energy supply is beginning to happen and the pace of innovation would grow immeasurably with a stronger strategic policy commitment DQG UHJXODWRU\ IUDPHZRUN DQG XUEDQ SODFHV can be literally greened with a suite of ecologically sensitive interventions at the

$ IHZ \HDUV EHIRUH WKLV D JOREDO RLO EXVLQHVV pension fund invited me to help plan and GHVLJQ ¶(XURSH·V PRVW VXVWDLQDEOH XUEDQ H[WHQVLRQ· $QG LQ ZH ZHUH VLPLODUO\ EULHIHG WR KHOS FRQFHLYH WKH ¶JUHHQHVW· HYHU legacy for an Olympics. ,·YH PDGH LW VRXQG OLNH D FRPSHWLWLRQ LQ bravado and in some ways it was and perhaps VWLOO LV 6D\ ZKDW \RX OLNH EXW DW OHDVW WKHVH SHRSOH KDG JRRG LQWHQW 6XFK DVSLUDWLRQV DUH DSSOLHG DOVR DQG HTXDOO\ WKHVH GD\V WR FRQFHSWV OLNH ¶SODFH· ¶JRRG GHVLJQ· ¶VWURQJ FRPPXQLW\· ¶VXVWDLQDEOH WUDQVSRUW· ¶JUHHQ EXLOGLQJV· DQG HYHQ ¶VXVWDLQDEOH OLIHVW\OHV· What on earth can it all mean? Well, at least we helped get this stuff on the DJHQGD $W ULVN SHUKDSV RI EHLQJ D WRXFK MDGHG RQH ZRXOG KDYH WR VD\ WKDW DV \HW LW KDV PHDQW YHU\ OLWWOH LQ SUDFWLFH 7KHVH LGHDV or rather words, are bandied about like WKRVH LQ ROG VFKRRO PLVVLRQ VWDWHPHQWV ,·P WKLQNLQJ ¶LQWHJULW\· ¶KRQHVW\· ¶WUDQVSDUHQF\· 7XUQ LW DURXQG DQG ZRXOG DQ\RQH HYHU VWDWH a commitment to dishonesty, obfuscation, GXSOLFLW\" ,Q ODQG DQG SURSHUW\ WHUPV LW ZRXOG UHDG ¶, DP SODQQLQJ D EDGO\ GHVLJQHG SODFH OHVV FDU GHSHQGHQW XQVXVWDLQDEOH GHYHORSPHQW ZLWK ÁLPV\ DQG OHDN\ EXLOGLQJV and a weak community populated by RXWUDJHRXVO\ ZDVWHIXO SHRSOH·

macro and micro levels creating a greener URRIV FDSH SRFNHW SDUNV HGLEOH ODQGVFDSHV tree planting and grander parks and water features. Combine these kinds of elements together DQG ZLWK D EHVSRNH ÀQDQFLDO PRGHO DQG investment structure as we aim to do at %HHVWRQ 3DUN RXU RZQ XUEDQ H[WHQVLRQ LQ %URDGODQG 1RUIRON DQG ZH EHOLHYH ZH·OO not only create a very attractive, high value SODFH WR OLYH RIIHULQJ D EHWWHU TXDOLW\ RI OLIH IRU households of all kinds, but that it will attract DQG UHWDLQ HQWUHSUHQHXUV DQG PDNH LW VXSHU easy for people to live in environmentally sustainable ways. :H QHHG H[HPSODUV RI FRXUVH WKDW SURYH WKHVH ideas and this is why several years ago we FUHDWHG %H\RQG *UHHQ 'HYHORSPHQWV WR WU\ WR SXW WKHVH LGHDV LQWR SUDFWLFH ,Q D IHZ \HDUV , hope that you will be able to visit the emerging place at Beeston Park and see for yourselves what a difference these ideas can have when they are translated in a disciplined way into homes, streets, green spaces, energy systems that you can visit, live and work in and, in due course, observe better everyday ways of living.

%URZQ &R

$QQXDO )RFXV 5HSRUW 9

Nick Dawes MRICS, 3DUWQHU +HDG RI &RPPHUFLDO 'LYLVLRQ %URZQ &R QLFN GDZHV#EURZQ FR FRP

COMMERCIAL PROPERTY IS THE COMMERCIAL SECTOR ENVIRONMENTALLY FRIENDLY?

7KHVH DUH HQYLURQPHQWDO PHDVXUHV LQFOXGLQJ LQVXODWLRQ DQG SRZHU VDYLQJV 7KHVH DJUHHG code levels are imposed by the planning authorities on developers via Planning &RQVHQWV 7KH LQLWLDWLYHV DUH WR HQVXUH DOO new dwellings are to a certain standard, and over time these standards would EHFRPH PRUH VWULQJHQW 7KH FRPPHUFLDO VHFWRU KDV %5(($0 ZKLFK LV VLPLODU WR WKH UHVLGHQWLDO &RGH /HYHOV 0RUH UHFHQWO\ (QHUJ\ 3HUIRUPDQFH &HUWLÀFDWHV (3&V KDYH EHHQ LQWURGXFHG ZLWK DVVHVVPHQW EHWZHHQ $ WR + and these assessments are mandatory for most buildings. Brussels has an eye to having D SDQ (XRUSHDQ DVVHVVPHQW RI EXLOGLQJ HIÀFLHQF\ )URP QR FRPPHUFLDO building with heating will be allowed to be OHW RU VROG ZLWK DQ (3& UDWLQJ EHORZ DQ ( ,W ZRXOG EH SUXGHQW WR DVVXPH WKDW RYHU WLPH *RYHUQPHQWV DQG SRVVLEO\ WKH (XURSHDQ 8QLRQ ZLOO VWDUW WR SXVK this base level higher.

7KH FRPPHUFLDO DQG UHVLGHQWLDO GHYHORSPHQW sector has, over the last decade, become more environmentally aware but mainly WKURXJK LPSRVLWLRQ /HJLVODWLYH obligations have been imposed upon it to improve its energy HIÀFLHQF\ 7KH UHVLGHQWLDO development sector has had to embrace what is known as Code /HYHOV

Much of the above came in either before RU GXULQJ WKH UHFHVVLRQ $V WKHUH ZDV OLWWOH building at all over the last seven years, much RI WKH LQGXVWU\ MXVW DGGHG WKHVH REOLJDWLRQV WR their already long list of economic concerns. 7LPH KDV PRYHG RQ DQG WKH UHFHVVLRQ LV to some degree, behind us. Commercial landlords, developers and occupiers are far more aware of environmental issues. Being businesses cost savings are a priority. With ever increasing power costs, cost savings on heating and lighting are important factors particularly in factories and warehouses. 0RGHUQ FODGGLQJ LV QRZ YHU\ HIÀFLHQW DQG WKH cost of replacing old cladding can be looked at in terms of heat saving, and therefore, cost savings for both tenant and landlord. Many occupiers are looking for more roof lights in buildings so as to increase natural light, which saves on electricity whilst DOVR LPSURYLQJ WKH ZHOO EHLQJ DQG ZRUNLQJ environment. Rainwater harvesting systems are now much more common, particularly for ODUJH EXLOGLQJV ZLWK VLJQLÀFDQW URRI VSDFH

10 %URZQ &R

$QQXDO )RFXV 5HSRUW

“From2018, no commercial building with heating will be allowed to be let or sold with an EPC rating below an E.”

7KURXJK D FRPELQDWLRQ RI legislation and hard economics new and refurbished buildings, both residential and commercial, can and will become more HQYLURQPHQWDOO\ HIÀFLHQW ,W LV safe to say that all new builds will be more environmentally HIÀFLHQW WKDQ WKHLU SUHGHFHVVRUV With a better economy, some of the environmental opportunities will be adopted for company SURÀOH UHDVRQV LUUHVSHFWLYH RI legislative imperatives and hard economics. However, whatever the motivation this sector of the property market has been forced to embrace environmentally HIÀFLHQW GHVLJQV LQ D YDULHW\ RI ways and it is now accepted as WKH QRUP ,W LV SXWWLQJ LWV RZQ house in order. simply through design and modern building materials.

PRUH H[SHQVLYH WR EXLOG WKDQ conventional housing but can, in the right location command corresponding premiums when sold making the schemes ÀQDQFLDOO\ YLDEOH 6XFK VFKHPHV FDQ DOVR EHQHÀW IURP FHUWDLQ planning advantages. Planning consents can, with very high environmental credentials, gain planning consent where conventional schemes would not achieve consent. Because RI WKH KLJK EXLOG FRVWV 6HFWLRQ 106 and other planning obligations may be reduced or ZDYHUHG WR UHÁHFW WKLV :H DUH also beginning to see schemes where residential or commercial applications are submitted LI WKH\ DUH UXQ E\ FR ORFDWHG renewable energy plants such as solar or biomass combined heat and source systems as part of a single application.

There are examples where highly environmentally friendly designs, which are FRUUHVSRQGLQJO\ HIÀFLHQW can and do command higher rents than their more conventional counterparts. This goes a long way to defray the additional costs to build or refurbish such units. Residentially we are now seeing some bespoke eco home VFKHPHV ZLWK &RGH /HYHOV DW RU EHLQJ EXLOW 7KHVH are environmentally designed identifying matters such as renewable energy to power homes, very high insulation capabilities, installations such as reed bed sewerage systems, and building from UHQHZDEOH SURGXFWV 7KHVH DUH

%URZQ &R

$QQXDO )RFXV 5HSRUW 11

Matthew Rivers 'LUHFWRU RI )XHO 3URFXUHPHQW 'UD[

SUSTAINABLE BIOMASS A UNIQUE ROLE IN THE UK ENERGY MIX

(QVXULQJ WKDW WKH 8.·V WUDQVLWLRQ WR D ORZ carbon economy is done cost effectively, through the use of biomass, helps keep our economy competitive and supports growth DQG MREV ERWK LQ WKH GHYHORSPHQW DQG RSHUDWLRQV SKDVHV $W 'UD[ 3RZHU 6WDWLRQ IRU H[DPSOH ZRUN SURYLGHG WR RQH FRQWUDFWRU alone created or safeguarded more than a WKRXVDQG MREV 7KH FDVH IRU VXVWDLQDEOH ELRPDVV JHQHUDWLRQ LQ WKH 8. LV DV FRPSHOOLQJ DV HYHU EXW LW KDV seen challenge from, mostly poorly informed, sources. Regrettably, and somewhat akin WR WKH IDUPLQJ VHFWRU WKH PDMRULW\ RI SHRSOH (of all walks of life) are too distant from the realities of rural activity and assume that by burning biomass we are responsible for the destruction of the rain forest!

7KH SDVW \HDU KDV EHHQ DQ HYHQWIXO WLPH IRU WKH VXVWDLQDEOH ELRPDVV LQGXVWU\ 'UD[ KDV been a very busy place and our evolution from the owner and operator of a single, albeit ODUJH FRDO ÀUHG SRZHU VWDWLRQ WR D JURXS whose activities span the whole biomass supply chain continues. Over the last year 'UD[ KDV VHHQ QRWDEOH SURJUHVV DFURVV DOO key areas of our business: biomass sourcing, generation and supply. Our own biomass fuel sourcing and processing business in WKH 86 FRQWLQXHV WR JURZ %HVSRNH ELRPDVV receiving, storing and distribution facilities KDYH EHHQ FRPPLVVLRQHG DW WKH 'UD[ 3RZHU 6WDWLRQ LQ 6HOE\ 1RUWK

Our ambition remains to convert three of the VL[ JHQHUDWLQJ XQLWV DW 'UD[ 3RZHU 6WDWLRQ to burn sustainable biomass in place of coal, with a fourth unit under evaluation. We have already converted two units and plan to convert the third in 2015/16. Our transformation is the largest decarbonisation SURMHFW LQ (XURSH DQG ZLOO PDNH 'UD[ WKH ODUJHVW UHQHZDEOH JHQHUDWRU LQ WKH 8. DQG RQH RI WKH ODUJHVW LQ (XURSH :KLOH VRPH RWKHU UHQHZDEOHV WHFKQRORJ\ SURMHFWV may claim to have similar capacities, their intermittency and therefore load factor, leaves them trailing when it actually comes to electricity dispatched. Our two converted units alone supply more than enough renewable electricity to meet the needs of two million homes.

12 %URZQ &R

$QQXDO )RFXV 5HSRUW

,W UHPDLQV DV LPSRUWDQW DV HYHU IRU DOO RI the biomass used for power generation to be from sustainable sources and be understood to be sustainable. Our industry has to remain beyond reproach however LQWHQVH WKH VFUXWLQ\ EHFRPHV 7KH ELRPDVV EXUQW DW 'UD[ FRPHV LQ PDQ\ IRUPV including forest thinnings and residues from the forestry sector, agricultural residues, such as straw and some energy crops, such as miscanthus. We value very highly the relatively modest TXDQWLWLHV RI DJULFXOWXUDOO\ GHULYHG UHVLGXHV DQG FURSV WKDW ZH FDQ VRXUFH LQ WKH 8. We would very much like to have more local origin material, but are acutely aware VXFK VRXUFLQJ PXVW QRW EH DW WKH H[SHQVH RI IRRG SURGXFWLRQ FDSDELOLW\ )RU WKLV reason, and that many other parts of the world have readily available and low cost forest residues, much of our procurement LV IRFXVHG RYHUVHDV ,W LV LPSRUWDQW WR remember that we already source the PDMRULW\ RI RXU FRDO IURP RYHUVHDV VR LQ effect we are simply replacing one imported fuel with another. Whatever the origin of our biomass it must PHHW WKH H[DFWLQJ VWDQGDUGV VHW RXW LQ RXU sustainability criteria. Our sustainability policy, which has been in place since 2008, is designed to ensure that we can verify both the legality and sustainability of all the biomass burnt in our power station. Our procurement process ensures that the production and delivery of our biomass VLJQLÀFDQWO\ UHGXFHV JUHHQKRXVH JDV HPLVVLRQV FRPSDUHG WR FRDO ÀUHG JHQHUDWLRQ We have long believed and advocated that mandatory criteria are the best way to ensure that all the biomass used in

Sustainable biomass has a unique role in the UK energy mix: it is low carbon, cost effective and provides reliable, ÁH[LEOH SRZHU 0RVW other renewables cost more, cannot be relied upon and often need fossil fuelled power stations on standby to mitigate intermittency. According to the Department of Energy and Climate Change, meeting the UK’s 2050 carbon targets without sustainable biomass will increase the cost by £44 billion.

electricity generation is demonstrably VXVWDLQDEOH DQG GHOLYHUV PDMRU FDUERQ VDYLQJV UHODWLYH WR IRVVLO IXHOV 7KH UHDOLW\ LV WKDW LW ZLOO RQO\ EH LQ $SULO WKDW ZHOO GHÀQHG UHJXODWRU\ FULWHULD ZLOO DSSO\ DQG ZH DUH FRQÀGHQW WKDW ZH DUH DOUHDG\ PHHWLQJ and will continue to meet, these new UHTXLUHPHQWV Sustainability is absolutely critical to our entire strategy.

6XVWDLQDELOLW\ DQG energy security are very real concerns faced by both the QDWLRQDO *RYHUQPHQW

and at the farm gate. More and

more end users are demanding higher

sustainability criteria for raw materials which are passed down the supply chain, which have potential to increase production costs faced by farmers. We have more recently seen energy security at the farm level move up the agenda, with many businesses taking to renewable electricity and heat generation. 7DNLQJ FRQWURO RI HQHUJ\ FRVWV DQG UHFHLYLQJ WKH *RYHUQPHQW VXEVLGLHV DYDLODEOH FDQ LPSURYH SURÀWDELOLW\ VLJQLÀFDQWO\ 6XVWDLQDELOLW\ ZLOO EHFRPH LQFUHDVLQJO\ LPSRUWDQW WR WKH 8. DJULFXOWXUDO VHFWRU ZKLOH LW DOVR FRQWULEXWHV WR WKH 8. HQHUJ\ PL[ Rob Meadley Head of Renewable Energy Services 01652 654833 robert.meadley@brown-co.com

%URZQ &R

$QQXDO )RFXV 5HSRUW 13

James Brown 3ODQW 3DWKRORJLVW DW WKH -RKQ ,QQHV &HQWUH 1RUZLFK MDPHV EURZQ#MLF DF XN

FARMING AND SCIENCE IN INTERESTING TIMES

CHALLENGES FROM CLIMATE, TRAVEL AND REGULATIONS.

Science has had enormous EHQHÀWV IRU IRRG SURGXFWLRQ $UDEOH farmers use the products of science enthusiastically: the best new crop varieties, themost effective chemicals, excellent agronomy – andmore. Thanks to farmers’ use of VFLHQWLÀF DGYDQFHV IRRG LV IRU PRVW people, more reliable and cheaper in relative terms than ever before. Yet there are clouds looming – even a ‘perfect storm’ of threats to this largely happy situation. How can scientists help farmers overcome them?

14 %URZQ &R

$QQXDO )RFXV 5HSRUW

WHFKQRORJ\ WR FKDUDFWHULVH '1$ YDULDWLRQ LQ the rust fungus and thus locate the origins RI WKH QHZ UDFHV 7KH UHVHDUFK LV VXJJHVWLQJ ways in their movement could be limited. Plant breeding is crucial for combatting GLVHDVHV %UHHGHUV H[SORLW NQRZOHGJH RI the genomes of crop plants in several ways. ,QGLYLGXDO '1$ YDULDQWV DUH XVHG DV PDUNHUV for useful traits because it can be easier to VHOHFW SODQWV ZLWK D '1$ WDJ WKDQ WR VFRUH WKH WUDLW LWVHOI WKLV DSSURDFK LV XVHG URXWLQHO\ LQ ) K\EULG FURSV VXFK DV PDL]H DQG LQFUHDVLQJO\ LQ VPDOO JUDLQ FHUHDOV *HQHWLF PDSV RI VHYHUDO '1$ PDUNHUV FDQ EH XVHG WR SURGXFH JRRG FRPELQDWLRQV RI VHYHUDO JHQHV my colleague Paul Nicholson has taken this DSSURDFK WR VHSDUDWH D JHQH IRU H\HVSRW resistance in wheat from one which reduces \LHOG )LQDOO\ EUHHGHUV FDQ XVH LQIRUPDWLRQ about the distribution of large numbers of markers to broaden the genetic basis of GLVHDVH UHVLVWDQFH -,& LV ZRUNLQJ ZLWK 1,$% &DPEULGJH 5HDGLQJ 8QLYHUVLW\ DQG ZKHDW breeding companies to develop this strategy. $ORQJVLGH JHQRPLFV EUHHGHUV QRZ KDYH EHWWHU ZD\V RI LGHQWLI\LQJ GLVHDVH UHVLVWDQW SODQWV $ EHQHÀW RI LQWHUQDWLRQDO WUDYHO LV WKDW they can run trial nurseries in areas where the climate is most favourable for a disease. ,Q D IHZ \HDUV WKH XVH RI GURQH WHFKQRORJ\ WR VFRUH ÀHOG WULDOV PRUH DFFXUDWHO\ DQG PRUH often will increase the precision of selecting for disease resistance and other traits. 'HVSLWH WKHVH DGYDQFHV SODQW EUHHGLQJ UHPDLQV D VORZ SURFHVV 7KH QHZ (XURSHDQ 8QLRQ UHJXODWLRQV RI SODQW SURWHFWLRQ

)URP P\ RZQ SRLQW RI YLHZ DV D SODQW GLVHDVH specialist, the greatest threats to reliable IRRG SURGXFWLRQ LQ WKH 8. DUH UHJXODWLRQV ZKLFK ODFN D VFLHQWLÀF EDVLV LQFUHDVHG JOREDO movement of diseases and the uncertainty arising from accelerating climate change. One RI WKH FRUQHUVWRQHV RI WKH *UHHQ 5HYROXWLRQ KDV EHHQ SODQW EUHHGLQJ ,W ZLOO FRQWLQXH WR EH important, especially when combined with the full range of agricultural technologies. 7KHUH DUH LQFUHDVLQJ VLJQV WKDW FOLPDWH change is changing the distribution and LPSDFW RI SODQW GLVHDVHV 7KH PLOG ZLQWHU RI VWLPXODWHG 6HSWRULD DQG \HOORZ UXVW RI ZKHDW 7KH KRW VSULQJ RI JHQHUDWHG the largest epidemic of wheat brown rust in OLYLQJ PHPRU\ 7DQ VSRW D GLVHDVH SUHYLRXVO\ common in warmer countries, has started to appear regularly in Britain. We do not know how the climate will affect other diseases, not OHDVW EHFDXVH H[WUHPH ZHDWKHU HYHQWV DUH predicted to become increasingly common. ,Q WKH VKRUW WHUP D JUHDWHU WKUHDW LV WKH spread of disease internationally as a result RI WUDYHO DQG WUDGH 7KLV VKRW LQWR SXEOLF consciousness in 2012 with the outbreak of ash dieback, a catastrophic disease native to (DVW $VLD ZLWK KXJH ORQJ WHUP LPSOLFDWLRQV IRU IRUHVWU\ DQG ZLOGOLIH LQ WKH 8. /HVV ZHOO NQRZQ LV WKH HTXDOO\ GUDPDWLF PRYHPHQW RI QHZ UDFHV RI ZKHDW \HOORZ UXVW 7KLV KDV EHHQ happening since 2001 and has accelerated LQ WKH ODVW WKUHH \HDUV 0\ FROOHDJXHV 'LDQH 6DXQGHUV DQG &ULVWyEDO 8DX\ DW -,& DORQJ ZLWK UHVHDUFKHUV LQ 'HQPDUN )UDQFH Pakistan and elsewhere, are using genomic

chemicals have been criticised by many in the farming industry for diverse reasons. )RU PH DV D SODQW SDWKRORJLVW LW LV ZRUU\LQJ that they do not consider how new diseases ZLOO EH FRQWUROOHG ,W WRRN \HDUV IURP WKH HPHUJHQFH RI 6HSWRULD DV DQ LPSRUWDQW GLVHDVH LQ WKH ODWH ¶ V EHIRUH EUHHGHUV FRXOG produce a stready stream of wheat varieties with moderately good resistance. )RU 5DPXODULD RI EDUOH\ DGYDQFHV LQ JHQHWLFV pathology and breeding are speeding things XS²LW ZLOO WDNH SHUKDSV \HDUV ,Q WKH meantime, farmers have controlled these diseases using fungicides effective against a wide range of pathogens. New technology is allowing scientists tomake newdiscoveries faster than ever before. Yet crop research is a slow business and there are nomagic bullets to deal with new threats. Farmers need to be able to use the best available varieties, chemistry and agronomy to protect our food supply.

%URZQ &R

$QQXDO )RFXV 5HSRUW 15

Simon Wearmouth MRICS, FAAV. &KDUWHUHG 6XUYH\RU $JULFXOWXUDO %XVLQHVV &RQVXOWDQW %URZQ &R VLPRQ ZHDUPRXWK#EURZQ FR FRP

WATER OF GROWING IMPORTANCE

Following such a seemingly wet period over the last few \HDUV SDUWLFXODUO\ LQ WKH (DVW RI (QJODQG LW PD\ EH GLIÀFXOW to consider water as a resource under stress. However, in the recent past, UK water resources have been under considerable pressure. In many catchments, not just in the south and east, there was little or no water available for abstraction during dry periods. Predictions indicate that the extremes experienced are likely to become more common in the future due to climate change.

WLPHV 7KH LPSDFW RQ agriculture of these cuts can EH VLJQLÀFDQW GHVSLWH WKH IDFW WKDW

uplift in earning potential for the land over and above

Whether you are a climate change sceptic or QRW 7KH (QYLURQPHQW $JHQF\ DUH PRQLWRULQJ catchments very carefully and when short term abstraction licences come up for renewal every effort should be made to safeguard every last drop. 2Q D OLJKW ODQG IDUP WKH DYDLODELOLW\ RI VXIÀFLHQW water to irrigate specialist crops in rotation can HDVLO\ DGG…SHU DFUH WR WKH FDSLWDO YDOXH of the land if not more. When the increase in capital value is considered alongside the

a combinable crop rotation, the availability of irrigation water is a resource that concerted effort should be made to protect and enhance. Whilst the number of agricultural abstraction OLFHQFHV JUHDWO\ H[FHHGV WKH QXPEHU RI abstraction licences for public water, it will always be licences for public water that will take precedence over agricultural water in dry

LUULJDWHG DJULFXOWXUH HTXDWHV WR RQO\

of water use nationally.

7KH :DWHU $FW WKH WK 0D\

UHFHLYHG 5R\DO $FFHQW RQ

7KH SXUSRVH RI WKH $FW LV to reform the water industry to make it more innovative and responsive to customers and to increase the resilience of water supplies to QDWXUDO KD]DUGV VXFK DV GURXJKW DQG ÁRRGV

16 %URZQ &R

$QQXDO )RFXV 5HSRUW

7KH QH[W VWHS LV WR DSSRLQW D ÀUP ZLWK H[SHULHQFH LQ UHVHUYRLU GHVLJQ DQG XQGHUWDNH the necessary soil tests to locate the most suitable site for the reservoir, taking into DFFRXQW H[LVWLQJ RU SODQQHG LQIUDVWUXFWXUH 7KH FRVW RI D SURMHFW FDQ EH VLJQLÀFDQWO\ UHGXFHG LI WKHUH LV FOD\ RQ WKH IDUP $V D JXLGH WR EDVLF UHVHUYRLU FRVWLQJV %XW\O OLQHG UHVHUYRLUV FRVW LQ WKH UHJLRQ RI… SHU PLOOLRQ JDOORQV YHUVXV D &OD\ OLQHG UHVHUYRLU EHLQJ LQ WKH UHJLRQ RI…SHU PLOOLRQ gallons. *UDQW IXQGLQJ KDV KLVWRULFDOO\ EHHQ DYDLODEOH IRU FDSLWDO FRVWV LQFOXGLQJ ZDWHU HIÀFLHQW DSSOLFDWLRQ HTXLSPHQW DQG WKUHH FRPSHWLWLYH TXRWHV ZLOO EH UHTXLUHG IRU DOO DVSHFWV RI WKH scheme. %URZQ &R VHFXUHG RYHU…P RI JUDQW DLG in the last round of funding for clients investing in water management schemes and are well SODFHG WR DVVLVW LQ VHFXULQJ VRPH RI…P RI JUDQW DLG WR EH PDGH DYDLODEOH LQ WKH QH[W round.

7KH PDLQ FKDQJHV EURXJKW DERXW E\ WKH $FW WKDW ZLOO KDYH VLJQLÀFDQW EHDULQJ RQ IDUPHUV DUH WKH DEVWUDFWLRQ OLFHQFH UHIRUP ,VVXHV which include time limiting of some licences, PRUH SRZHU WR EH JUDQWHG WR WKH (QYLURQPHQW $JHQF\ WR FRQWURO DEVWUDFWLRQ LQ WLPHV RI drought, over abstracted catchments will be VXEMHFW WR PRUH VFUXWLQ\ DQG D SRWHQWLDO ORVV of ability to claim for compensation for loss of OLFHQVHG TXDQWLW\ ZKHQ LW FDQ EH SURYHG WKDW abstraction is causing environmental damage. 2YHU WKH ODVW GHFDGH %URZQ &R KDYH EHHQ actively involved in assisting clients in ensuring that abstraction licences are safeguarded. One particular method of doing so is the construction of winter storage reservoirs to create a buffer during periods of peak rainfall. :H KDYH KDG VLJQLÀFDQW VXFFHVV LQ VHFXULQJ JUDQW DLG IRU VXFK SURMHFWV RQ EHKDOI RI RXU FOLHQWV ODWWHUO\ WKURXJK WKH ¶5XUDO (QWHUSULVH *UDQW· DGPLQLVWHUHG E\ '()5$ ZKLFK ZDV DYDLODEOH IRU IXQGLQJ RI XS WR RI FDSLWDO FRVWV RI UHVHUYRLU SURMHFWV

Capital grant funding has been unavailable IRU DOO RI EXW WKH QHZ &RXQWU\VLGH 3URGXFWLYLW\ 6FKHPH ZLOO EH ODXQFKHG LQ with one of the focuses being water resource management. $Q\RQH WKDW KDV D SURMHFW LQ PLQG LV DGYLVHG WR SUHSDUH LQ JRRG WLPH *UDQWV ZLOO EH DZDUGHG on a competitive basis and applicants who can make their case stand out will have a much better chance of securing funds. Heightened pressure on summer abstraction, coupled with the potential of shorter term licences, is likely to push more growers to H[DPLQH PRUH FORVHO\ WKHLU ZDWHU UHVRXUFH position and look to secure water availability. :KHQ SODQQLQJ D ZDWHU VWRUDJH SURMHFW WKH ÀUVW VWHS VKRXOG EH WR REWDLQ WKH QHFHVVDU\ statutory consents – abstraction licensing and SODQQLQJ SHUPLVVLRQ 7KLV SURFHVV FDQ WDNH VHYHUDO PRQWKV DQG VKRXOG EH H[SORUHG YHU\ HDUO\ LQ WKH SURFHVV DQG IRUP WKH ÀUVW SDUW RI any feasibility study.

%URZQ &R

$QQXDO )RFXV 5HSRUW 17

Dr Stephen Dorling $VVRFLDWH 'HDQ )DFXOW\ RI 6FLHQFH &HQWUH IRU 2FHDQ DQG $WPRVSKHULF 6FLHQFHV 6FKRRO RI (QYLURQPHQWDO 6FLHQFHV 8QLYHUVLW\ RI (DVW $QJOLD

EXTREME WEATHER EVENTS: THE IMPACT ON GLOBAL CROP PRODUCTION

Ten years ago, most of the talk around climate and its impacts on food and farming focused on the decades ahead and the opportunities and challenges which climate change might bring. This remains a hugely relevant issue of course, not least regarding investment decisions, supply chain planning, the food YHUVXV IXHO GHEDWH DQG VXVWDLQDEOH LQWHQVLÀFDWLRQ PRUH JHQHUDOO\ +RZHYHU WKH ZHDWKHU DQG FOLPDWH RI the here and now have taken centre stage in recent years, placing enormous stress on food production V\VWHPV WKURXJK D SOHWKRUD RI H[WUHPH HYHQWV FRQWULEXWLQJ VLJQLÀFDQWO\ WR YRODWLOLW\ LQ FRPPRGLW\ SULFHV Where once we focused almost exclusively on the weather in our own backyard, now we have more than one eye on the impacts of weather conditions around the world, for example in South America, Eastern Europe, Australia, China and North America. Commodity markets speak of ‘needing a weather event’ to LQWURGXFH DQRWKHU URXQG RI YRODWLOLW\ DQG ÀQDQFLDO RSSRUWXQLW\ LQWR WKH PDUNHW $ UHFRUG EUHDNLQJ \HDU RI ORFDO SURGXFWLRQ RQ IDUP LV QR ORQJHU D JXDUDQWHH RI D JRRG ÀQDQFLDO UHWXUQ

18 %URZQ &R

$QQXDO )RFXV 5HSRUW

:H KDG WR IDFH IRRG SULFH VKRFNV LQ and 2011 which were in part responses to actual weather and climate events, the latter DOVR VXEVHTXHQWO\ EHLQJ UHODWHG WR SROLWLFDO LQVWDELOLW\ LQ 1RUWK $IULFD 'XULQJ WKHUH has been widespread coverage of a forecast HYHQW DQ (O 1LxR ZKLFK KDV LQWURGXFHG VRPH instability and speculation into markets. (O 1LxR LV IXQGDPHQWDOO\ D ZDUPLQJ RI WKH VXUIDFH ZDWHUV LQ WKH (DVWHUQ 3DFLÀF 2FHDQ typically lasting a few months to a year, but its UDPLÀFDWLRQV IRU XQXVXDO ZHDWKHU FRQGLWLRQV are felt more widely around the world, although OHVV FOHDUO\ LQ WKH 8. $V , ZULWH WKLV (O 1LxR LV VWLOO VWUXJJOLQJ WR VKRZ LWV KDQG DV RI PLG 'HFHPEHU +RZHYHU ZH VKRXOGQ·W be surprised by the impact of this forecast EHFDXVH SUHYLRXV DFWXDO (O 1LxR HYHQWV KDYH UHVXOWHG LQ H[WUHPH ZHDWKHU HYHQWV DURXQG WKH ZRUOG ODVWLQJ PDQ\ PRQWKV D JRRG H[DPSOH EHLQJ WKH (O 1LxR )LJXUH WKH ODUJHVW VXFK HYHQW LQ UHFHQW WLPHV (O 1LxR events tend to increase globally averaged WHPSHUDWXUH :KLOH (O 1LxR FRQGLWLRQV WHQG WR GLVFRXUDJH KXUULFDQH LQWHQVLÀFDWLRQ LQ WKH 1RUWK $WODQWLF ZH QHYHUWKHOHVV HVWLPDWH WKDW

total global insured and uninsured losses associated with natural catastrophes are KLJKHU LQ PRGHUDWH (O 1LxR \HDUV 8QSLFNLQJ the overall effects on food and agriculture of DFWXDO DQG IRUHFDVW (O 1LxRV LV D FKDOOHQJH now that we also have to factor in market UHVSRQVHV ¶EHIRUH WKH HYHQW· V\QWKHVLV RI ODWHVW VFLHQWLÀF ÀQGLQJV E\ WKH ,QWHUJRYHUQPHQWDO 3DQHO RQ &OLPDWH &KDQJH ,3&& 7KHUH DUH PDQ\ JOREDO FOLPDWH PRGHOV developed by research institutes around the ZRUOG ZKLFK DUH LQWHU FRPSDUHG DV SDUW RI this process, producing a range of possible IXWXUHV 'HVSLWH WKH XQFHUWDLQW\ RQH VREHULQJ UHVXOW VKRZQ LQ )LJXUH LV WKDW D YHU\ KLJK proportion of these models agree that air WHPSHUDWXUH ZLOO LQ WKH SHULRG LQFUHDVH WR OHYHOV ZKLFK H[FHHG W\SLFDO FXUUHQW DGDSWDWLRQ VWUDWHJLHV GHÀQHG DV EH\RQG WZR standard deviations higher than the baseline SHULRG 7KH VWUHQJWK RI WKLV PRGHO consensus can easily be overlooked, but at our peril. Returning to future climate change then, VDZ WKH SXEOLFDWLRQ RI IXUWKHU

6R ZKDW DERXW WKH PRUH ORFDO ZHDWKHU HYHQWV RI " :LQWHU ZDV LQFUHGLEO\ VWRUP\ PLOG DQG ZHW LQ WKH 8. DQG UHFRYHU\ IURP ÁRRGLQJ VWLOO FRQWLQXHV $SULO OLNH VR PDQ\ RWKHU UHFHQW $SULOV LQ WKLV EUDYH QHZ era, was another pale shadow of the long term average, in this case markedly warm across WKH 8. DQG DOVR GU\ DFURVV ODUJH SDUWV RI WKH arable growing region (and similar in that UHVSHFW WR $SULO DQG 6SDUH D WKRXJKW IRU FROOHDJXHV DFURVV the Channel who had to endure hail the size RI WHQQLV EDOOV DQG DVVRFLDWHG ÁRRGLQJ RQ -XQH WK DQG WK LQ )UDQFH *HUPDQ\ DQG WKH Netherlands. Nevertheless, spring, summer and autumn have overall been relatively kind WR 8. FURSV IURP D ZHDWKHU SHUVSHFWLYH DQG KDV DOVR SURYLVLRQDOO\ EHHQ D JRRG \HDU IRU 8. ZLQH SURGXFWLRQ ² FKHHUV

Figure 2:

PHDQ WHPSHUDWXUH

(standard deviation UHODWLYH WR ORQJ WHUP average)

0

1

2

h2sum2150 Value

Figure 3: 7KH QXPEHU RI JOREDO climate models, from a JURXS RI VLPXODWLQJ a change in mean temperature which is beyond typical planned adaptation thresholds (more than two standard deviations above the EDVHOLQH PHDQ E\

0 1 2

5 6

8

10 11 12

15 16

%URZQ &R

$QQXDO )RFXV 5HSRUW 19

Adam Oliver 3DUWQHU %URZQ &R D ROLYHU#EURZQ FR SO

THE INTEGRATED CHALLENGE: CLIMATE, AGRICULTURE AND FOOD SECURITY LV OLNHO\ WR EH ODEHOOHG WKH ZDUPHVW \HDU RQ UHFRUG E\ the World Meteorological Organization (WMO)) and are likely to continue rising over the FRPLQJ GHFDGHV EHFDXVH RI WKH VWRFNV RI JUHHQKRXVH JDVHV DOUHDG\ LQ WKH DWPRVSKHUH 7KHVH rising temperatures are now having a measurable impact on glaciers, ice caps, sea levels, rainfall SDWWHUQV DQG ZHDWKHU ´HYHQWVµ VHH SUHYLRXV DUWLFOH $W WKLV SRLQW LQ WLPH DYHUDJH WHPSHUDWXUHV DUH ƒ& DERYH SUH LQGXVWULDO OHYHOV DQG PDQ\ FRPPHQWDWRUV EHOLHYH WKDW DQ RYHUDOO ULVH RI ƒ& LV WKH WKUHVKROG EH\RQG ZKLFK LPSDFWV DUH OLNHO\ WR EH VHYHUH *LYHQ WKH FXUUHQW WUDMHFWRU\ VHH )LJ OLPLWLQJ WKH ULVH WR ƒ& DSSHDUV XQOLNHO\ 7KHUH LV FRQVLGHUDEOH XQFHUWDLQW\ VXUURXQGLQJ FOLPDWH FKDQJH 7KHUH DUH VRPH IDFWV WKDW ZH FDQ EH UHDVRQDEO\ VXUH RI WKRXJK $YHUDJH JOREDO WHPSHUDWXUHV DUH ULVLQJ

Emissions from fossil fuels and cement (GtCO 2 /yr)

Fig 1.1: Emissions are on track for 3.2-5.4°C “likely” increase in temperature above pre-industrial. Large and sustained mitigation is required to keep below 2°C 6RXUFH 2YHU D VFHQDULRV IURP WKH ,3&& )LIWK $VVHVVPHQW 5HSRUW DUH VKRZQ )XVV HW DO &',$& *OREDO &DUERQ %XGJHW

20 %URZQ &R

$QQXDO )RFXV 5HSRUW

ZLWQHVVHG VRPH PLOHVWRQHV RQ WKH SDWK WR ZKDW PDQ\ DUH ELOOLQJ DV WKH DOO LPSRUWDQW 8QLWHG 1DWLRQV &OLPDWH &KDQJH &RQIHUHQFH &23 WR EH KHOG LQ 3DULV LQ 'HFHPEHU ,QGHHG LW SUREDEO\ LV JRLQJ WR EH WKH VLQJOH PRVW LPSRUWDQW HYHQW IRU WKH SRVW HUD VLQFH WKH IDLOHG &RSHQKDJHQ VXPPLW RI 7KH FOLPDWH FRQIHUHQFH LQ /LPD LQ 'HFHPEHU PDGH VRPH PRGHVW VWHSV IRUZDUG PDLQO\ LQ setting out a framework for the upcoming negotiations but as ever, serious divisions remain between developing countries DQG GHYHORSHG RYHU ZKR ZLOO DFWXDOO\ IRRW PRVW RI WKH ELOO 7KH DQVZHU WR WKLV TXHVWLRQ PXVW RI FRXUVH WDNH LQWR DFFRXQW who bears responsibility for where we are today, but also take into account the growing emissions of rapidly industrialising GHYHORSLQJ FRXQWULHV ,QGLD LV RIWHQ VLQJOHG RXW DV ZHOO DV WKH more obvious China). 7KH 81)&&& LQ 3DULV LV LQWHQGLQJ WR EH GLIIHUHQW WR .\RWR ZKLFK ZDV YHU\ PXFK D WRS GRZQ SURFHVV 7KLV WLPH *RYHUQPHQWV DUH EHLQJ DVNHG WR VXEPLW WKHLU LQGLYLGXDO commitments in a clear, transparent and understandable ZD\ 7KLV LV GXH WR KDSSHQ E\ $SULO VW DQG LW LV WKHVH commitments that ultimately will be used to formulate the 3DULV 7UHDW\ ² ZKLFK LV WKHUHIRUH LQWHQGHG WR EH D ERWWRP up approach. Whilst this should mean that a legally binding treaty gets agreed, the danger is that it uses the lowest common denominator in order to reach an agreement. However, in many ways – the most important elements of WKH GHDO DUH DOUHDG\ DJUHHG 7KH (8 DQG VXEVHTXHQWO\ &KLQD DQG 86 WKURXJK D ELODWHUDO DJUHHPHQW KDYH DOUHDG\ VHW out their commitments for the post 2020 period (see right). Without these commitments it was widely believed it would be LPSRVVLEOH WR H[WUDFW IXUWKHU DQG DPELWLRXV FRPPLWPHQWV from the rest of the world given these three entities make up DSSUR[LPDWHO\ KDOI RI RYHUDOO JOREDO HPLVVLRQV )LJ Many commentators believe that taken in the round, the DERYH LV XQOLNHO\ WR FRQWULEXWH VXIÀFLHQWO\ WR WKH LQWHUQDWLRQDO target of limiting warming to 2 degrees.

EU’s commitment: UHGXFWLRQ FRPSDUHG WR

OHYHOV

E\

$W OHDVW

RI WKH (8·V ½

ELOOLRQ EXGJHW IRU WKH period should be spent on climate FKDQJH UHODWHG DFWLRQ

China’s commitment: to reach peak carbon emissions by LI QRW VRRQHU 7R UHDFK WKLV goal China has pledged clean energy VRXUFHV ZLOO DFFRXQW IRU RI &KLQD·V WRWDO HQHUJ\ SURGXFWLRQ E\

United States’ commitment: E\ FRPSDUHG WR OHYHOV 7KLV LV GRXEOH WKH SDFH RI reduction targeted for the period 2005–2020.

Commitments from the three largest emitters ahead of COP21 in Paris in December 2015:

Fig 1.2: The top four emitters in 2013 covered 58% of global emissions: 6RXUFH &',$& /H 4XHUH HW DO *OREDO &DUERQ %XGJHW

10

8

CO2 emissions (GtCO2/yr)

28%

CHINA (Growth rate 2012-2014 4.2%)

6

14%

UNITED STATES (Growth rate 2012-2014 2.9%)

4

10%

EU28 (Growth rate 2012-2014 1.8%)

2

7%

INDIA (Growth rate 2012-2014 5.1%)

0 1960 1970 1980 1990 2000 2010

%URZQ &R

$QQXDO )RFXV 5HSRUW 21

Adam Oliver 3DUWQHU %URZQ &R D ROLYHU#EURZQ FR SO

SO WHAT’S CHANGED IN 2014 RELATING TO CLIMATE CHANGE AND WHAT ARE THE CONNECTIONS WITH AGRICULTURE AND FOOD SECURITY?

:HOO ² WKUHH WKLQJV KDYH FKDQJHG )LUVWO\ WKHUH has been a shift in thinking away from mitigation of climate change having to be a substantial DQG FRQWLQXHG HFRQRPLF EXUGHQ ,QVWHDG WKH RYHUDOO LQYHVWPHQW SODQV RI WKH :RUOG (FRQRP\ DUH HQRUPRXV (XUR EQ ´LQYHVWPHQW RIIHQVLYHµ IURP WKH (8 DORQH RYHU WKUHH \HDUV DQG WKH TXHVWLRQ QRZ EHLQJ DVNHG LV FDQ DOO WKDW investment be used to put the world economy RQ WR D ORQJ WHUP ORZ FDUERQ WUDMHFWRU\ ,Q RWKHU words can investment be used to stimulate JURZWK SDUWLFXODUO\ LQ ¶JUHHQ· HQJLQHHULQJ construction and research and development. 7KH VHFRQG WKLQJ WKDW KDV FKDQJHG LV WKDW )RRG 6HFXULW\ SROLFLHV LQFUHDVLQJO\ UHFRJQLVH FOLPDWH FKDQJH DV D PDMRU WKUHDW WR IRRG DQG QXWULWLRQDO security. Rather than discussing climate change and its effect on crop yields and emissions, there is now a much greater prominence JLYHQ WR )RRG 6HFXULW\ *RYHUQPHQWV DUH seeking to address the linkages through VXSSRUW WR ´FOLPDWH VPDUW DJULFXOWXUHµ GHÀQHG as “agriculture that sustainably increases productivity, resilience (i.e. adaptation), reduces/ removes greenhouse gases (mitigation) and enhances achievement of national food security DQG GHYHORSPHQW JRDOVµ )$2 :KLOVW this may not have an immediate impact on 8. DJULFXOWXUH WKH LPSDFW IXUWKHU DÀHOG PD\ SRWHQWLDOO\ EH VLJQLÀFDQW

22 %URZQ &R

$QQXDO )RFXV 5HSRUW

Jobs and prosperity

Food security

Income poverty

&RQÁLFW & security

Energy and water

Part of the answer has to lie in “adaptation” which is rapidly replacing “mitigation” as the main policy tool going forward. Another part of the answer has to be investment in technology (GM included) to to increase productivity and a third element has to include increasing Research and Development funding into “climate smart” agriculture. Climate negotiations in 2015 and thereafter will need to recognise the pivotal role agriculture has to play in both absorbing greenhouse gases (soils and forests) and delivering enhanced food security to nine billion people (by 2050). All in all there is much to do to conceptualise policies that fully respond to the new challenge of creating a sustainable food system in an age of climate change. “Agriculture is being charged with: delivering food and food security to nine billion people whilst at the same time reducing or removing greenhouse gas emissions – in a climate that is warming and becomingmore prone to extreme weather events. Just a simple task then...”

CLIMATE CHANGE

Education

Health

The impact of climate change on development goals

Gender equality

Climate change impacts directly on three of WKH JRDOV )URP LPSDFW RQ WKHVH WKUHH DUHDV VWHPV D UDQJH RI LQWHUOLQNHG NQRFN RQ HIIHFWV on all goal areas

7KH WKLUG WKLQJ WKDW KDV FKDQJHG LV D VKLIW LQ thinking from institutional investors which, if LW JDWKHUV SDFH FRXOG ZHOO KDYH D VLJQLÀFDQW impact on the investment landscape going IRUZDUG $W WKH 81 FRQIHUHQFH LQ 1HZ

endowment announced in May that they were selling out of fossil fuel related companies ZKLOH WKH PLOOLRQ 5RFNHUIHOOHU foundation also announced its intention to divest from coal and oil. 6R ZKDW GRHV DOO WKLV PHDQ IRU $JULFXOWXUH" Well, if food security policies increasingly UHFRJQLVH FOLPDWH FKDQJH DV D PDMRU WKUHDW WR food and national security – can agriculture respond to the challenge and answer that WKUHDW $W WKH 81 FOLPDWH FRQIHUHQFH LQ 6HSWHPEHU WKH ´*OREDO $JULFXOWXUDO $OOLDQFHµ was launched that aims to enable 500 million farmers worldwide to practice climate smart DJULFXOWXUH E\ 7KLV DLPV LQFOXGH sustainable increases in productivity (and LQFRPHV JUHDWHU UHVLOLHQFH RI IRRG V\VWHPV reduction or removal of greenhouse gas emissions and improvement of food and QXWULWLRQ VHFXULW\ ,Q RWKHU ZRUGV ² DJULFXOWXUH is being charged with: delivering food and food security to nine billion people whilst at the same time reducing or removing greenhouse gas emissions – in a climate that is warming and becoming more prone to H[WUHPH ZHDWKHU HYHQWV -XVW D VLPSOH WDVN then....

%URZQ &R

$QQXDO )RFXV 5HSRUW 23