Episode 9: Jan Rosenow
EPISODE 9: Jan Rosenow – Practicus Digital Transformation Podcast
This episode, we’re joined by Dr. Jan Rosenow of the Regulatory Assistance Project (RAP) to talk all things ESG. In particular, we discuss innovative solutions that businesses are turning to in the energy crisis and the role digital has to play. Jan also sits on the board of the European Council for an Energy Efficient Economy (eceee) and is a member of the Steering Committee of the Coalition for Energy Savings and the Build Upon2 Advisory Board.
Dave Kemble 0:00
Hello, and welcome to the practice digital transformation podcast. For regular listeners of the podcast, they’ll recognize that we usually have a digital slant on all of our podcasts that we’ve recorded so far. Today, we’ve got a bit of a special edition. And this was born out of conversations with our clients, where they explain that ESG is very much top of their agenda. So environmental sustainability and governance is an area of focus for many companies. And we were lucky enough to be joined by Dr. Yan rose. Now, the conversation was absolutely fascinating. There’s a real, real interesting insights in there. And Dan’s background, just short enough to say in recognition of the work that he’s done within the field, Yan was named one of the world’s top 25 Energy influencers, and has been appointed special adviser to the House of Commons. And he will let you listen to the podcast, we welcome your feedback. And without further ado, on with the podcast.
Jan, thank you for joining us today. Really great to have you on the show. You’re currently a principal and director of European programs at the Regulatory Assistance Project or our AP. For anyone who hasn’t heard of it before. Can you give a bit of background and a bit of context about what the role that you do entails and a little bit more about our AP itself?
Jan Rosenow 1:46
Thanks, Dave. Yeah, happy to I mean, rabbit, as we call it isn’t a household name. I mean, people have never heard of us most of the time unless they work in the energy space. So what we do is, we assist governments, policymakers, decision makers with crafting, better policy and regulation to accelerate the transition to clean energy. That’s our kind of mission. And it goes back to when we were founded in the early 1990s 30 years ago, around the Rio Conference, when three regulators decided they would like to set up an organization to help the next generation of policymakers, regulators in the energy sector, to essentially come up with with good ideas for how we can decarbonize the energy system, but also deliver energy more cheaply, more affordably and more efficiently to customers. So it’s that kind of trilemma, you know, how do we get sustainable energy that’s affordable, but also reliable to customers?
Jon Webster 2:48
One hell of a challenge, isn’t it? Is it quite daunting going into a role like that? I think you’ve been there a few years now, haven’t you?
Jan Rosenow 2:57
Yeah, it’s it’s a steep learning curve. I’ve been there for almost seven years now. And most of my work before I joined RAP was in the UK. I’ve done a lot of work with industry in the UK in my world in consultancy, but also working with the UK Government agencies and different government departments. But the work at RAP really means that you no, no work globally, we work in China, India, the US and Europe. I lead the Europe team, but we work across many different countries ranging from Poland, Germany, Belgium, the UK. And that means you’re trying to understand all these different places, and how they function is immensely rewarding, but also very challenging when you come to it the first time.
Dave Kemble 3:45
Absolutely. I’m not surprised. Do you find that there are commonalities with the challenges that you face that when you are working with policymakers across the world, do the same challenges come up time and time again? Or do you find nuances?
Jan Rosenow 4:02
Well, this, the challenges are as similar. But of course, they’re different in different places. So I mean, right now that everybody’s asking, What can we do to get away from expensive fossil fuel imports? Like, yeah, we I’m sure we going to talk about that later. But, you know, the energy crisis that we’re in, raises the same questions everywhere, you know, how can we reduce the cost of energy, given that gas prices are now about 10 times higher than what they used to be? You know, compared to pre pandemic levels? So that’s a question that comes keep keeps coming up. And the other question is, that, that we keep seeing, as, you know, how can we accelerate the transition towards clean power? How can we really manage to decarbonize the power sector? And that’s, that’s, that’s a huge challenge, but also there’s a lot of things happening in that space. But the question is, how can we accelerate so that’s, that’s a that’s a challenge that just keeps coming up and that we were working on On very intensely in a number of locations right now.
Dave Kemble 5:03
Interesting, interesting. And in terms of getting to net zero, then what’s what do you think we have coming down the pipe from the UK? In particular, in terms of policy? Or if that’s perhaps a bit a bit too difficult to pin down at the moment? What would you like to see coming down the pipe?
Jan Rosenow 5:24
Yeah, I mean, as you rightly pointed out, it’s a bit early days, because you have the new prime minister, as has just been put into her position, very, very recently. And they announced already a review of the existing policies for net zero in the UK, you know, that review will take place over the coming months. And we don’t know yet what that review will conclude in the end. But it’s essentially looking at which policies are working and which policies are not working so well. And are there any areas where the UK could do better? You know, are there any other policies we might need in order to achieve our climate goals in the UK? But you know, we don’t know yet what that review is going to result in, what is clear is that, you know, the government will continue the journey towards zero emissions, electricity in the UK, we’ve seen an amazing transition in this country from 40% of our electricity coming from coal power plants, just 10 years ago. It’s it’s been less than 2%. Last year. And yeah, that’s gonna get phased out over the next few years completely. The goal is now by the mid 2030s, so in only 13 years time to have zero emissions electricity in the UK, which is a huge transformation. And, you know, this government as a previous government, we’ve continued to work on that, no doubt. what exactly that means, in terms of concrete new policies, is very hard to predict at this at this point. You know, we I think the focus is very much on the cost of living crisis, reducing energy costs. What I would like to see more is also focusing on how can we also at the same time as we reduce energy costs, keep driving down emissions from from the energy sector, how can we help businesses, how can we help households to lower their costs while also reducing emissions? I think that’s where the focus needs to be. And I hope that the government is going to going to do that. I’m hopeful that they will, but but remains to be seen exactly what they’re going to do.
Jon Webster 7:37
One of the things that I think is potentially quite interesting about it, do you think we’re facing a watershed moment from businesses perspective, world events being the way they are and the way that the price of energy has gone up? Do you think it’s the sort of watershed moment… not just for heavy industry and transport but for the wider world of commerce for which the cost of energy hasn’t been so closely pegged to profitability?
Jan Rosenow 7:58
Absolutely, yeah, I think if you are a business that’s not energy intensive, then your your energy costs might be a fraction of your of your operating costs, maybe it’s two or 3%. You know, maybe there’s a cost of running an office, but really, most of your costs are wages. And suddenly, that is changing quite quite rapidly, you know, if your energy costs double, or maybe triple, suddenly, that’s becoming maybe 10% of your operating costs, and it becomes a lot more important to pay attention to that. And what we find is that energy intensive businesses, of course, are well aware of the need to drive out in efficiencies, because it’s, that’s a direct impact on their bottom line. But if your energy costs are so small, then really, the incentive to pay attention to reducing those costs is relatively small as well. And that is changing quite a bit. And I think it’s the risk, isn’t it? You know, even if, if we now have, and we now we have two years of sort of some cushioning of those costs, as the government announced, you know, paid for, by, by essentially, by general taxation. But I think there is always the risk that in the future energy costs may go up again. And I think this, what you described John, as a watershed moment, I think that risk and that perception that maybe this is going to happen, at some point again, in the future that will, will last for quite a long time to come. And then I think it will change perception of energy as being something that’s relatively cheap. We don’t need to worry about something that actually is a business risk, and we need to tackle and, and businesses have lots of opportunities to do that. Even if they haven’t paid much attention to energy before. I think that there’s no one opportunity to actually take stock and look at it again and think about what are ways of insulating a business from those volatilities that we’ve seen in global energy markets.
Jon Webster 10:00
So what types of things do you think they should be considering?
Jan Rosenow 10:05
Well, I will make this very specific. So it’s, it’s, you know, think about rooftop solar, for example, if you have a premises where you can install rooftop solar, that is now really a no brainer, you know, the cost of solar have dropped by 85%. Over the last decade, that we know that from the latest IPCC report that was published in April this year. So solar has never been cheaper. And at the same time, electricity prices have gone through the roof, right, they’re incredibly, you know, they’re, they’re a lot more, let me just do this, again, electric electricity prices have gone through the roof, you know, they are at levels now that are completely unheard of. And depending on where you are, and what kind of installation you have, you get your money back within a few years time now. Whereas before, that will take a lot longer. So that’s one of the very specific things businesses might want to consider if they have unused rooftop, where they can install solar. The other one is energy efficiency. Are there ways of actually lowering your energy consumption, you might think about lighting, there’s still lots of inefficient lighting installed in commercial buildings in the UK, LEDs, again, if become incredibly cheap, a very efficient and even if you have your CFLs compact fluorescent light bulbs, which used to be energy efficient, 15 years ago, replacing those might make a lot of sense. And there are lots of other areas to insulation, you know, better windows, things like that. More efficient pumps, motors, there are lots of areas where businesses can save energy still. And then the final the last and the third element, I think it’s better management of energy, you know, having an energy manager who actually understands how the business uses energy, and how to tweak that in a way to maximize efficiency to avoid unused, not unnecessary energy use. You think about an office that’s, that is has air conditioning, making sure you really optimize that air conditioning system. So you do not unnecessarily cool the building, when there’s no one in the building. You know, there are lots of things like that where energy managers can can find ways of reducing energy consumption just by having better management of energy.
Dave Kemble 12:29
That’s a really interesting point you make there, Yan. One of the things I was gonna ask first, before I move on to what you’re talking about office buildings, especially at the moment with hybrid working was with renewable energy, which, in your opinion, or what’s the the facts here with regards to what’s the most efficient renewable energy? Is it solar? Is it kinetic? Is it a hydro wind turbines? What works most efficiently?
Jan Rosenow 12:58
Well, em, I think the efficiency is almost irrelevant when it comes to renewable energy, because it’s so abundant. I mean, the the amount of wind and solar and hydro energy that’s out there is is just phenomenal. It’s I mean, there’s multiple times more than the energy that we actually need it for, for high economy. It’s, it’s the question is more, what’s the cost of actually harvesting that energy. And that varies quite a bit. Most analysis now. Assume that the majority of energy will come from wind and solar going forward, there’s a there’s still a role for hydro for sure that there is a small 4g role for geothermal energy and lots of other other types of renewable energy. But solar and wind are seen by most analysis as the key technologies to provide the bulk of energy. And then a lot of that can get converted, you know, you may think about green hydrogen, you know, that can be a means of storing some of that energy for long periods of time, and use it in applications where, you know, electrification, using electricity directly, it’s just not an option. Think about shipping, for example, over long distances, or think about your industrial processes that need a lot of heat. That’s where electricity may not be suitable. And you might need other energy carriers such as hydrogen from renewable so that there’s lots of opportunities to convert solar and wind electricity into other forms of energy that can be used in other applications.
Jon Webster 14:34
And that’s a big part of the problem, isn’t it? Because the wind doesn’t always blow and the sun doesn’t always shine. It’s a big element in creating a sustainable world.
Jan Rosenow 14:41
It’s, it’s huge, and I mean, time and time again, I see people in my Twitter feed saying Oh, have you ever thought about the wind doesn’t always blow the sun doesn’t always shine and renewables don’t work and you know, this is never gonna happen. Well, of course, I mean, this is this since I been working in energy which is normal. 20 years, this has always been a topic of debate and advocates for renewables, you know, the energy system operator national grid in the UK, the regulator, often the government, the energy companies, they all work on this. And they’re well aware of these challenges. It’s not new, you know, it’s not that they never heard that the wind doesn’t always blow or the sun doesn’t always shine. I mean, that is just common sense. The question is more, how do we how do we accommodate that we have an increasingly variable supply of energy? And how do we accommodate that in an energy system that needs to be reliable, affordable, and zero carbon. And one of the ways to do that is to think about the demand side, as a resource that is much more flexible. You think about all the electric vehicles that will come onto the onto the road in the next few years, or think about all the heat pumps that get installed, or the batteries that will be connected, there’s huge potential to use that, to provide flexibility to kind of follow the supply side as much as possible. That is one of the ways to deal with that. And we already talked a bit about green hydrogen. Yeah, there’s there are ways to store renewable energy as well, over quite long periods of time. And you know, there are other elements too, I mean, energy efficiency will help to reduce the size of the problem further. Yeah, there are lots and lots of technologies that can be used to actually address that. And your modeling done by National Grid suggests it can be done as early as 2035. You know, we could have a fully decarbonize electricity system, largely based on renewables, that is still reliable and affordable and provides the energy that we need to our businesses and to our homes, when we need it. So they are there. There are lots of ways to do it. It’s not easy. I’m not saying it’s easy at all, it’s this is difficult, that we need a lot more innovation. But the technology already exists today, it’s a matter of scaling it.
Dave Kemble 17:12
Interesting. You’re quite right. You made a comment earlier about efficiencies with regards to perhaps office buildings, and what floors you might want to heat or air can the air conditioning within those buildings. And I was just thinking, as you were talking there, Yan, we have with technology at the moment, you could potentially see a future where with hybrid working, you could have office workers via an app saying yes, I am going to be going on site today I’m on route to the office, which could feed through to kind of, I think, is it Hive or something like that, that type of a app, which would allow then a business to understand, okay, to what level do we need to heat the building that we’ve got and using technology to really be as efficient as you possibly can when it comes to energy. So if you know that you’ve only got a third of the workforce coming on on site on a particular day, then the office automatically says, almost like going into an NCP carpark, you’ve got spaces down on the bottom floor, and that’s heated, we know that we’re going to have more so then actually, that’s going to start heating floor to if that makes sense. But that would have to mean a hot desk style of working. But is that is that where you see the future going? That type of thing?
Jan Rosenow 18:40
Well, clearly, there’s a huge role for digital in all of this, right, and you just use one example, there are many, many more, where, by using smart technology, we can not only help the integration of of clean energy in the energy system, but also provide cost savings to customers. And that’s where I think you have a clear win win situation, right, you can get cheaper energy delivered, you get the same energy services, but for less, but at the same time, you’re helping to integrate a cheaper source of energy that doesn’t require the burning of fossil fuels. And to give you a specific example of how digital can do that, I mean, I think electric vehicle charging is a is a very good example. If you just come home after work, and you plug in your car, and you say you’re charged up to whatever 8% of what your battery charge should be. It will start charging at six o’clock in the evening. That’s just when you’re in the middle of the peak period, which is four to seven in the evening in the UK. That’s when electricity prices tend to be the highest. That’s when currently most of the gasps operating. So the electricity that you’re using is quite carbon intensive. If instead, you would choose to say, you know, charge the car overnight, during periods when there’s a lot of wind, maybe, but not a lot of demand, because people are sleeping businesses are not not operating. And there may even be excess electricity in the grid, and you could get the same amount of energy, but for a lot less. So there used to be before the energy crisis, there used to be tariffs, where you actually got paid in the UK, to charge up your electric car that made some headlines, quite a few times, you got paid to charge your car, which seems to be completely counterintuitive, but the alternative of of not paying people to do that would have been to maybe curtail an offshore wind park, you know, there could not generate at a much higher cost, or to find other ways of balancing the system. So paying someone to charge the car is just a cheaper option of balancing the energy system. And, and that is the sort of thing that he could already do today, you know, you can sign up to a tariff that is essentially offering you cheaper, electric vehicle charging overnight, cutting your costs by you know, easily by three quarters. That’s a sort of thing that could also work. If you are, let’s say, a business, and you offer your staff on site charging of electric vehicles. Yeah, many businesses have now charge points, so people can turn up at work and plug in the electric vehicle. If you had, so onsite solar, for example, you could have a device that coupled the charging modulates charging, in line with how much the solar is generating. So you optimize that. So lots of other ways. I’m just using your electric vehicles as an example there lots of other technologies that can do similar things. It’s basically an algorithm that optimizes for whatever you wanted to optimize for, it might be cost, it might be carbon emissions might be something else. But that’s kind of how these things work. And the technology is already well advanced, it’s more of a question of getting it installed in the right places, and seeing the innovation that creates business models around this. So more people want to do it.
Jon Webster 22:23
It’s really interesting. I was wondering, who is really good at this at the moment? Yeah, I know, you work an awful lot of organizations and governments. But yeah, who’s who’s good? Would you say this at the moment? What can we learn from them?
Jan Rosenow 22:38
I mean, I would, I would probably separate between energy suppliers, and maybe use an example of a business that is pretty innovative when it comes to energy companies. One of probably the world’s most innovative energy companies is actually in the UK, it’s called octopus energy. And there was a horse a whole piece, I think, in in wired in the US news outlet. I think earlier this week, about the I think the title was something like the most innovative energy company in the world, and it was about octopus energy. The things that they’re doing, are really quite groundbreaking. It’s all about trying to do the things I just described, using the example of electric vehicles, but trying to optimize energy services in such a way that your final customers get energy more cheaply, but also to integrate all these different technologies and octopus are at the forefront of that, you know, using solar electric vehicles, batteries, heat pumps, and bundle all of that up in a way that makes sense to the customer, but also to the energy system as a whole. So I would point out them as as certainly a force of innovation in the energy space, a disrupter. Interestingly, the founder of octopus energy, Greg Jackson, he, he actually doesn’t come from the energy world, you know, he worked in, in telecommunications, you know, he’s not an energy industry. person, you know, he came to the energy sector, as an outsider. And we know from other sectors, right? I mean, you may think of Amazon, whatever you think of Amazon, clearly, yeah. Jeff Bezos wasn’t someone who was a bookseller but he understood that changing the way how how your books are being sold, delivered, ordered, could could really make a huge difference and it clearly has and that’s that’s the sort of thing I think that Greg Jackson has has done with energy space, looking at it as an outsider seeing ways of making it better, and driving innovation. So I think that’s that’s what they’re doing. If I use a second example of a company that’s that’s consuming GE not providing it. That’s really innovative. I would point point out that Google is doing some some rather exciting work again, you know, people have different views of Google. I’m not I’m not commenting on on Google as a as a, as a company and what they’re doing, but what they’re doing in the energy space is certainly very interesting. So what Google have said, is that we don’t want to just be another company that says, Oh, we have 100% renewable energy, you know, which is really not. You know, that’s kind of the last decade, that’s when companies bought certificates that said, Oh, you consumed 100% renewable energy. But it really does not mean that at all, you know, it doesn’t mean that at all times in the year, you’ve been using renewables. Most of the time, there were you just use the same electricity as everybody else, right. And you just bought some certificates that certify that there was a certain amount of renewable energy that was fed into the grid over the last year, but not at all times when you were using energy that was extra renewable. But was Google is saying, well, we want that to be renewable energy 24/7. You know, we want zero carbon energy, 24 hours, seven days a week. But how do you do that? It’s, it’s immensely challenging. You have to work out for where do you locate your datacenters? Where can you get your energy from when the wind isn’t blowing? The sun isn’t shining yet? How do you deal with that? How can you store electricity? To do that? You know, how can you maybe integrate or build your own renewables to help you with our batteries? So that’s what they’re trying to do, you know, and by 2030, I think is their goal. So in only eight years time, but the first thing they’re doing is to measure it, you know, they measure very precisely in different locations, where what actually is the shear in different hours, you know, over the course of a day, and then looking across the year of renewable energy that we’re using. And where do we do this already? Quite well, and where do we need to do better? And then looking at the at the different solutions, and they will be very different in different places. But that’s, that’s the sort of thing that Yeah, we talked earlier about what is the innovation that we’re going to see in the energy space. And I mentioned, the demand site needs to be a lot more flexible, and try to accommodate the variability on the supply side. And that’s exactly what Google is trying to do. So I think that’s immensely inspiring, and other companies are following that already. Not everybody can do that. i But yeah, you need those those innovators, right. The disruptors, the people who actually develop those ideas, so then other people can follow and copy that.
Jon Webster 27:51
There are still lessons there aren’t there? And I think that even smaller businesses can take away one is it starts with the data. It starts with data-based decision making. Look at what you’re actually using, when you’re using it. And What’s it costing you when you do and then from there, look at how you can change your business.
Dave Kemble 28:05
I was going to ask exactly that, John, because there’s lots of examples there. And there’s clearly lots of innovation. If you were to counsel, a small or midsize organization in the UK, that hasn’t looked at ESG strategy yet, but that it’s on their agenda. And they know in 2023, we need to really focus on this. What would you counsel them? What would be the first two things or three things that they should do as an organization? In your opinion? Yeah.
Jan Rosenow 28:43
Well, I think it’s, it’s always good to get an external view on this right? There are organizations out there that have advised businesses on these matters over many, many years. And it depends, I guess, what kind of organization you are, in and what supply chain you’re interacting with. So it’d be quite different depending on the sector. And and, you know, I’m not an expert on the textile industry, for example, in the supply chain, there would be quite different to, let’s say, an office building, that that the main impact that business is having on the environment is is is mainly the energy use of that office building. So there’ll be quite different types of organizations and would require different types of expertise to understand what is the impact that we’re having, first of all, and do a stocktake. But I would, I would say, find someone who can can actually do this for you not don’t try to do it yourself, because that you know that they are well developed approaches to assess the performance of a business, looking at different criteria, whether that’s carbon or other sustainability criteria. area that you might want to look at two things like labor rights and you know the treatment of workers across the supply chain. So I would, I would think that’s always the first step to find somebody who can take an honest look at at your operations and look at the data. And then look at where, what is what are the potentials here to actually improve that in quite a bit of detail. Way back in, I think it was about 15 years ago, I was doing carbon footprints for a number of companies in the UK. And when you do a carbon footprint, you have to go and look at the whole supply chain, you basically start from your what’s the product that the business is selling? And what are the components that you actually need to make that product? Where are those components coming from? What materials are needed for those components? where’s that going to come from, and you sort of tried to draw a map of the entire supply chain, and then find data for each of the different points. So you know, how much carbon is emitted, to get the raw materials to manufacture the component that you need in your in your product? Getting all that data, and then you see actually this is where most of the impact is, that’s where you can really make a difference. So that’s, that’s why it’s so important to get someone who understands to do this well, first, and then develop a strategy based on that. So I think getting a good assessment first, and then help with identifying what are the options to actually improve the performance? I think that’s that’s the approach I would recommend.