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U.K. Energy Users Have a Taste of Brexit and Don't Like It

While negotiations on the U.K.’s exit from the European Union have stalled, natural gas prices had the biggest summer rally in three years thanks to dwindling domestic supply and the planned shutdown of the country’s biggest storage facility. Industrial-scale consumers paying millions of pounds for energy are seeking reassurance that Brexit won’t make it worse, as the plunge in the pound has already boosted import costs. Things are bad enough that Ineos Group Holdings Plc, the U.K.’s biggest closely held company, is considering making its own version of Britain’s iconic Land Rover Defender car in Germany, where industrial power rates are 24 percent cheaper than in Britain. And Centrica Plc, the nation’s biggest supplier to households, warned of risks with Brexit in August, when it increased electricity bills for the first time in three years. Until its divorce from Europe becomes final in March 2019, Britain is a member of the EU’s single market, which allows electricity and gas to flow freely across borders through cables and pipelines. While there’s no indication it’ll hamper free trade, some are worried energy is an afterthought, which risks unintended consequences. “My perception is that it’s not high on the priority list,” said Felix Lerch, executive chairman of Uniper SE’s U.K. business, which operates power stations, pipelines and a gas storage facility. “You don’t know at this point in time where it’s leading.” A Brexit strategy speech by Prime Minister Theresa May in Florence, Italy, on Sept. 22 didn’t mention energy at all. That’s even as Britain’s dependency on foreign gas is set to rise to almost two-thirds of consumption by 2025, from about half now, on dwindling North Sea output. Scared Traders The country is so heavily reliant on Norway, its biggest foreign supplier, that announcements of routine maintenance through the summer scared traders, with prompt prices jumping more than 20 percent in the third quarter. The Scandinavian nation, which met 38 percent of U.K.’s demand last year, is still on track to export a record volume this year. Jim Ratcliffe, the self-made billionaire founder of Ineos, whose profit mainly comes from chemicals, said the government is listening to concerns from the commercial sector, but the nation has been hurt by a long-term move away from industrial activity, including energy, as a pillar of the economy. Manufacturing has slumped from 17 percent of the U.K.’s gross domestic production in 1995 to 9.7 percent percent last year, according to the World Bank. “If you’ve got a business where energy’s important, like chemicals, you’re always going to go to Germany before you go to the U.K.,” said Ratcliffe, who will invest about 600 million pounds ($796 million) in developing the new car. “To encourage someone to invest real money in the U.K. there has to be some unique selling point.” Britain’s wholesale power premium over costs on the continent is partly because coal stations have closed at a faster pace than across the channel after a floor price on carbon emissions was introduced in 2013. The planned loss of Centrica’s Rough gas store means prices may rise further because the country will need to compete with other importers, from France to Japan, for liquefied natural gas cargoes. Europe has struggled even during the soft summer demand season to attract cargoes away from Asian buyers. LNG import terminals in France have cut tariffs to attract more fuel. The situation intensifies during freezing temperatures. Last winter, a worldwide cold snap combined with unexpected supply hiccups caused prices to jump. Britain didn’t need to bid against other nations because they had sufficient gas in storage to complement pipeline imports, but if they had, they would have paid dearly. In one week of January, U.K. prices would have had to be 50 percent higher to attract LNG cargoes away from Asia, according to pricing data from World Gas Intelligence. While many of the biggest energy users are concerned about what Brexit will bring, the fact that U.K. has already developed into an LNG hub will help secure supplies in the future, said Jeremy Nicholson, the director of the Energy Intensive Users Group. “It’s not like we’ve been sitting on North Sea production twiddling our thumbs,” he said. And some gas will still be extracted from the Rough facility this winter, though it will probably flow at a slower rate than normal because the pressure is lower. “No country’s an island, not even the U.K.,” said Matteo Mazzoni, an analyst at Nomisma Energia Srl in Bologna, Italy. “The U.K.’s a tiny fraction of global demand,” and it’s bargaining power is unlikely to deliver it the lowest prices, he said. May’s Pledge But U.K. homes don’t have it all that bad, at least not compared with those on the continent. Domestic power prices were 4.9 percent below the EU average last year. And households may get some respite after May on Wednesday pledged to fix the nation’s “broken” energy retail market by planning a price cap. More details will follow next week, she said. The U.K.’s future relationship with the EU “will be subject to the negotiations but our priority is maintaining affordable, clean and secure energy supplies for businesses and households,” the Department for Business, Energy and Industrial Strategy said by email. But there’s a risk that a potential cut in power trading will lead to higher prices because of different regulatory regimes in Britain and the EU, said Wolfram Vogel, director public and regulatory affairs of EPEX Spot SE, an electricity exchange in Paris that covers markets from Switzerland to the U.K. And Lars Troen Sorensen, vice president for U.K. government and regulatory affairs at Statoil ASA, the Norwegian energy company, says he’s afraid that energy will become a “residual” issue in Brexit negotiations and any policy changes may also add to costs. “If you change a number of the laws and the rules and the way we interact now, that can have some consequences on other things,” he said by telephone. “And those are things that you don’t see until it’s too late.”

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Time for the channel to start talking about the ISDN switch-off

There is nothing like an impending expiry date on a technology to hand the channel a chance to get out to customers and pitch the need for a transition to an alternative. The channel has gone through various Windows support deadlines that have helped encourage not just an OS migration but some additional hardware spending. The focus now is on telecoms with BT committed to switching off ISDN in 2025 and planning to stop selling new lines from 2020. According to Ofcom's recent Communications Market 2016 report there are around 3m ISDN lines in the UK, which represents a sizeable target for the channel to go after. “With 3 million ISDN lines still in play, resellers or service providers with no plan in place to convert these customers to IP telephony are potentially walking away from tens of millions of pounds of potential income,” said Paul Clarke, UK manager at 3CX. “The simple fact is that communication has moved on in leaps and bounds since the first VoIP calls in the 1990s, and the channel must be ready to allay any concerns that their potential customers may have," he added. Some of the issues that customers might be dealing with include making sure those firms worried about connection speed are reassured. There might be some that are yet to see the benefit of using a platform that goes beyond just providing voice. “Communication is the heart of the modern business: the ISDN switch might be the last chance for the channel to realise and benefit from this, by leading customers through potential challenges and helping them make the most out of IP,” added Clarke. As well as being in a position to move to a technology that is going to last well beyond 2025 there are cost savings that can be realised switching to VoIP telephony. Research from TalkTalk Business has found that those switching to VoIP technology saved an average of 35% on their costs, with a quarter halving them. The telco also found that a quarter of UK businesses were still not aware that ISDN lines were going to be switched off in 2025. “IP Voice products like SIP Trunking and Hosted Voice are essential for businesses looking to not only reduce telephony costs, but also adopt more modern approaches to work, such as those offered by collaboration and unified communications tools," said Guy Miller, director of Next Generation at TalkTalk Business. “Organisations that have made the switch to IP Voice (including Hosted Voice in addition to SIP) have more than justified the business case they made when it comes to reducing costs. Moreover, they’ve also deployed reliable systems that will reduce the chance of costly outages and provide them with futureproof technology, ready for the workforce of tomorrow," he added.

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Starbucks and McDonald's among members of new paper cup recycling deal

An agreement to give more people access to paper cup recycling has been signed by the Alliance for Beverage Cartons and the Environment (ACE UK) alongside 14 cross-industry collaborators, including Caffe Nero, Greggs and Nestlé. More than 400 recycling points will be rolled out across the UK as the industry attempts to emulate the recycling success of drink cartons, which are now collected by 92% of UK local authorities through kerbside collections and recycling bank systems. “The paper cup industry is facing very similar recycling challenges to the ones the beverage carton industry faced when we started our programme ten years ago,” ACE UK chief executive Richard Hands said. “Whilst our primary focus will remain on increasing beverage carton recycling, we believe our expertise, experience and existing relationships can help the paper cup industry create a step change in cup recycling. Whilst it is early days, we have a clear measured plan agreed and expect to see significant progress in cup recycling over the next two years and beyond.” Creating a market More than 5,000 of coffee cups are discarded in the UK each minute, but less than 1% of these are actually recycled. Paper coffee cups are difficult to recycle because they are sealed with a polyethylene (plastic) lining on the interior, which can’t be recycled along with ordinary paper waste by local councils. From the start of next year, all ACE UK recycling banks will accept paper cups for recycling. This will deliver an extra 382 recycling points in 97 local authorities across the UK, with a further 33 recycling points scheduled during the next phase. Cups from these points will be processed at ACE UK’s recycling facility in Halifax. The group has also vowed to work to include cups in local authority kerbside collections. Commenting on the agreement, Paper Cup Recycling and Recovery Group (PCRRG) chair Neill Whittall said: “By generating greater volumes of cups for recycling this will create a market for the material, making cups more attractive to waste management companies and creating the potential for more schemes to be introduced to collect cups from a much wider range of locations such as offices and high street locations.” The full list of companies signed up to the deal are as follows: Benders Paper Cups, Bunzl Catering Supplies, Caffe Nero, Costa Coffee, Dart Products Europe, Greggs, Huhtamaki, International Paper, McDonald’s UK, Nestlé, Pret A Manger, Seda Group, Starbucks, and Stora Enso. Business efforts The business community has supported efforts to reduce waste from coffee cups through a range of in-store cup and pilot recycling projects. Selfridges, for instance, has teamed up with waste management firm Veolia and British papermaker James Cropper to reprocess disposable coffee cup waste into yellow shopping bags. Costa Coffee has led the charge towards circularity in the coffee industry, with the recent rollout of a pioneering cup recycling scheme to more than 2,000 of its stores across the UK. Rival chain Rival brand Starbucks has also introduced its own in-store recycling bins for paper cups. Starbucks already offers various recycling initiatives in regards to paper cups, like trialling a 50p discount for customers that bring their own cups.

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IKEA moves step closer to 'energy independence' as sales rise

Recent investments in France, Canada and Lithuania mean that IKEA, which operates 355 stores in 29 countries, now owns 415 wind turbines, the company said. “This means Ikea Group now owns more wind turbines than stores and is getting closer to its target to become energy independent by producing as much renewable energy as consumed through operations, by 2020,” Ikea said. The update came as IKEA reported that overall group sales for the year to August rose 3.8% to €34.1bn (£30bn), with 817 million customers entering stores. New IKEA chief executive Jesper Brodin said that the business would use its stable financial situation to invest in “meeting the needs of our customers even better”. Part of the furniture Sustainability funding has seen IKEA invest €1.5bn in wind and solar projects since 2009, with €600m allocated for further investments into renewable energy. The flatpack furniture giant’s flagship goal to produce renewable energy corresponding to the amount of energy it uses by 2020 sat at 71% upon release of its last CSR report. The retailer's People & Planet Positive strategy also places an emphasis on making consumer lives more sustainable. Alongside offering the 'sustainable life at home' products, Ikea now offers residential solar arrays to consumers in three countries. The solar panels are designed to link up with energy storage systems to store surplus renewable energy. Earlier this year, Ikea partnered with renewable energy firm Solarcentury to launch a new domestic battery storage solution that could help to double the amount of solar energy used by UK households and reduce electricity bills by 70%. Combining energy storage and solar will cost Ikea shoppers £6,925 in total, and homeowners can pay off the initial capital in around 12 years, at a 6% annual return.