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 January 06, 2012
12 green business predictions for 2012

 It is once again time to gaze into our green crystal ball and ask what green business trends will dominate the year ahead?

You can judge the success of last year's predictions for yourself, but if 2011 has taught us anything it is that there will be plenty of shocks and surprises in store as the global green economy continues to be influenced by countless external forces.

However, a few trends and technologies look a sure bet for next year, and all forward-thinking businesses should be aware of them.

1. The oil price is going nowhere

Barring the complete collapse of the global economy the oil price looks set to remain largely above the $100 a barrel mark.

A recent poll of analysts by Reuters predicted Brent would average $105 a barrel this year, down fractionally on 2010's record high of $111 a barrel. Oil producing countries have got used to what were once regarded as high prices and will be reluctant to see prices drop too far. Depending on your point of view, this is because of the power of the OPEC cartel or the simple fact they cannot increase supplies as easily as they once did.

Either way, high oil prices will mean further upward pressure on food prices, and all the tensions that implies. It also means that the case for investment in energy and fuel efficiency, as well as renewable energy capacity, will remain as strong as ever.

2. The carbon price could go anywhere

The record lows experienced by the EU carbon price in the final months of 2011 have finally prompted policymakers to take action. A key European Parliament Committee has voted in favour of a plan to push the price upwards and Denmark has vowed to use its presidency to tackle the issue.

The question is how any interventions will be structured and whether they can work. Any attempt to restrict the supply of carbon allowances remains at the mercy of political forces and would prove ineffective anyway if the eurozone crisis escalates and demand falls.

Regardless of what happens, it will be another disorientating year for the carbon markets.

3. Smart meters are a smart bet

It is one of the most overlooked aspects of the government's green agenda. The UK is committed to installing smart meters in all buildings by 2018, providing an omnipresent hub for both building management technologies and the long-promised smart grid.

If this target is to be met the roll out of smart meters needs to start cranking up a gear pretty soon. Expect to see smart meter firms and the large IT and energy companies that are working with them raising their profile in the months ahead.

4. We'll all want to plug in to plug-in hybrids

If electric cars like the impressive Nissan Leaf are the trail-blazers, plug-in hybrids could be the game-changer the auto industry has been looking for.

The prospect of a car than can travel distances of up to 40 miles using zero emission electric power before switching to a petrol or diesel engine for longer journeys promises to overcome the biggest objection to electric cars: the fear the battery will run out mid-journey.

The high profile Vauxhall Ampera and Toyota Plug-in hybrid will create a lot of buzz this year and assuming the cars offer reasonable performance they could quickly become the default option for green-minded motorists and cost-conscious fleet operators.

5. Green Deal Breaker

The government's flagship green policy will finally launch in October and will either resoundingly answer its critics, or prove an appalling damp squib.

Ministers have invested a huge amount of political capital in the innovative energy efficiency financing scheme, and will want to see the scheme get off to a vibrant start. Around £200m has already been promised to help drive the scheme and expect to see the government pull out all the stops to ensure early adopters take up the offer of energy efficiency makeovers.

6. Feed-in tariff frustration

There is still no end in sight to the solar feed-in tariff scandal that dominated the final few months of 2011, and it looks as if frustration and uncertainty will continue to dog the scheme during the first half of 2012.

A broader review of the entire initiative is in the offing, and while it promises to finally deliver a clear regression regime to stop the market becoming overheated again, fears remain that the scheme could still exceed its spending cap despite the recent cuts.

The scheme looks like a victim of its own success and until the government provides some much-needed clarity on its future direction, investors will remain sceptical about the appeal of some microgeneration technologies.

7. RHI to heat up renewables sector

In contrast to the confusion surrounding the feed-in tariff, the Renewable Heat Incentive should lead to a very good year for the renewable heat sector. The scheme is already up and running for business properties and is due to be expanded to domestic properties this year, delivering guaranteed and attractive returns to those who install low carbon heat systems.

If you have not already considered deploying renewable heat technologies, 2012 is a good time to look into it before the incentives are reduced.

8. Green Investment Bank prepares to invest

Another of the government's flagship green policies will take-off this year in the form of the Green Investment Bank. It is not as well financed as campaigners had hoped, nor will it be able to raise additional funds from borrowing, but it will almost certainly emerge as a major new institution supporting the UK's low carbon economy.

Full state aid approval is still required, but the government has vowed to launch the body as a fund by April, with the first investments to follow soon after. Expect some flagship projects in the waste, marine and offshore wind industries to benefit as a result.

9. The future is offshore

Despite planning barriers, a hostile media, and a tough economic climate, the UK's renewables industry will continue to go from strength to strength.

Nowhere will this be more apparent than off the UK coastline where both cutting-edge marine energy projects and giant offshore wind farms will continue to progress.

The UK is committed to delivering one of the world's largest and most ambitious engineering projects in its waters, and 2012 will see the sector continue to expand at a rapid rate of knots.

10. Giving scepticism a bad name

Intellectually the stance maintained by self-styled climate sceptics has never been weaker, and yet the economic crisis has given them an opportunity to morph into campaigners against costly green policies, using their friends in the press and their love of dodgy statistics to make their case.

The Tea Party-ification of British politics and the desire of some Conservatives (we're looking at you Osborne) to dismiss environmental policies as a "burden" has given these campaigners yet more influence and as their case weakens their attacks on the green economy become ever more vitriolic.

They are fighting a losing battle against efforts to make our economy and society cleaner, more resilient, more stable and more healthy, but they will prove an ever-more annoying thorn in the side of green businesses throughout 2012.

11. Catastrophe will strike... again

All the indicators on climate risk are pointing the wrong way. Results vary from year to year but the financial and human cost of extreme weather and climate-related disasters is on an unmistakably upward trend.

Meanwhile, our energy infrastructure remains as risky as ever with the Fukushima disaster following the BP oil spill in highlighting how fragile our energy supplies really are.

It is a safe bet that 2012 will again be marred by a large-scale environmental tragedy of one form or another. Meanwhile, sensible businesses and policymakers will start taking climate adaptation more seriously.

12. All eyes on Qatar

Qatar may have been the surprise choice to host the next UN climate summit, being as it is one of the most carbon intensive economies on the planet. But a handful of Gulf States, including Qatar, are serious about reinventing themselves as clean tech powerhouses and they have the cash to do so.

Expect Qatar to do its upmost to highlight its commitment to clean technologies, at the same time as desperately battling to continue the progress delivered at 2011's Durban Summit.