John Barnes Environment and Sustainability Director United Utilities

1. John Barnes Environment and Sustainability Director United Utilities Water and Climate Change: United Utilities Perspective

2. Presentation Overview • Brief Overview of UU • The impact of climate change of the provision of water services • Adaptation – the impact on our activities and our response • Mitigation – our strategy and plan

3. Water and Climate Change – a starting point “The economy is a wholly owned subsidiary of the environment” Herman Daly, 2005 “The effects of climate change will be felt everywhere …In the UK the effects will be mainly mediated through water, with increases in the number of both flood and drought incidents expected” H.M Treasury 2006

4. Introduction to UU • We are the UK’s largest listed water & wastewater company • Turnover of £2,386.8 million (2005/6) • Market capitalisation of £6,507 million • We provide services to over 27 million people worldwide • Employing 8,000 people • £10 billion invested in the UK between 1989-2005 • Between 2005-2010, £3.5 billion will be invested by UU in its water, wastewater and electricity networks – that works out at more than £20 per second

5. UK operations Serve close to 30% of the UK population 8,000 employees Scottish Water £1.4bn capital programme delivery and PFIs United Utilities £3.5bn capital investment programme covering water, wastewater and electricity distribution over 5 years. Northern Gas Networks 15% equity owner, asset management and operation, 36,000km network Welsh Water Asset management and operation, £1.5bn over 15 years Southern Water £750m capital programme delivery Contracted to deliver £5bn of capital investment projects across the globe

6. How Climate Change will impact the north west – water services • Wetter winters with more intense rainfall • Hotter and drier summers but with intense rainfall • Longer droughts, more severe droughts and more frequent droughts Thirlmere Reservoir, Lake District

7. Responding to the impact on our activities - water 2035 estimate – shortfall in supply of some 10% or around 200 million litres of water every day Measures to address this: • Reduce demand for water (leakage control and customer efficiency) • Increase supply of water (small scale new resource development and greater network integration) • Key proposal is the East-West link to move water from Prescot to Bury linking Lake District and Welsh sources

8. How Climate Change will impact the north west – wastewater services • Increased flooding incidences • Increased CSO discharges • Reduced final effluent discharge dilution • Increased blockages Carlisle Wastewater Treatment Works – January 2005

9. Responding to the impact on our activities - wastewater Traditional approach, to build our way out of this problem, will not work. Focus must be on: • Education – awareness that flooding can not be eliminated but must be managed, • Make public true levels of risk of flooding from all sources • Planning input – mandatory that all new development be drained on a sustainable basis e.g. green roofs, rainwater recycling, SUDS • Responsibility – Reduce the number of stakeholders involved in urban drainage to 2 – the regulator and a single operator Green roofs (above) and detention ponds (below)

10. Planning Our Response • Adaptation - a long term problem that demands a long term answer • Planning for its consequences needs to begin right now • We are including our intentions in our regulatory plans for 2010 to 2015 . • These plans will be influenced by the UKCIP rainfall scenarios to be released next year

11. UU’s carbon strategy and plan • There are four key strands to our carbon management strategy: • Seeking to achieve a net 5% reduction on the 2005/06 baseline for our “owned” carbon emissions by 2012 (with projected rises this is actually a reduction of 8% overall) • Continuing our reduction of emissions beyond 2012 in line with the long-term government targets set for 2050 • Influencing the external environment to support the achievement of these aims • Pursuing a vision of making carbon an integral part of the way we do business • But what is the context for setting this direction?

12. Providing context – UU’s carbon footprint • 2006/7 emissions - directly responsible for 472 thousand tonnes of CO2 equivalent using one-third of one per cent of all UK electricity • A further 1.57 million tonnes that we don’t directly own but can have an influence over.

13. Providing context – emission projections Graph of emissions – 1990 - 2050 • UU’s operational carbon footprint has nearly doubled since 1990 • This is a direct consequence of £10 billion of investment in assets to deliver environmental and customer improvements

14. Delivering our carbon strategy – to 2012 • A 8% gross reduction in CO2e emissions by 2012 • £22m investment in increasing CHP yield by 80% • UU home to one quarter of all sewage gas CHP sites (23 in total) • Improving pump energy efficiency • 18% reduction through green energy supply contracts Delivery of one 2.4 MW CHP engine to Davyhulme WwTW

15. UU’s (and the industry’s) challenge – the journey to 2050 and a 60% reduction 488,000 tCO2e CHP and IPM = 38,000 tCO2e Cost = £37m Wind = 80,000 tCO2e Cost = £80m Low carbon technology = 80,000 tCO2e Cost = £?? 170,000 tCO2e = TBD • UU carbon emissions baseline (2005/6) 488,000 tCO2e • Climate Change Bill targets 60% reduction on 1990 levels by 2050 • For UU, this equates to 122,000 tCO2e • To meet that target equals a reduction of 366,000 tCO2e • The diagram illustrates what abatement strategies could be adopted, with what impact and at what price 122,000 tCO2e

16. Delivering our carbon strategy – to 2050 • On the journey to 2050, aim to halve owned emissions from current levels by 2035 • require energy neutrality in wastewater operations • reduced pumping in water network • tackle problems at source • appropriate financial instruments • on-going research into renewable generation and low carbon technology • promoting water efficiency

17. Delivering Our Strategy through influencing others – our customers • Power Shower Study • joint project with Liverpool John Moores University • electric showers better than mixer or pumped showers • water saving showerheads • Better information • For customers, making the link in the minds of our customers that there is a carbon footprint associated with the provision and use of water • Reduced heating of water (about 8 x water cycle footprint)

18. Delivering our strategy – stakeholder challenges • For Ofwat and the Environment Agency, crucial to strike the balance between the on-going delivery of aquatic environmental improvements and the airborne (i.e. carbon) consequence • For Ofwat, creating the framework to encourage investment in greenhouse gas mitigation • Financial instruments such as incentives • Minimising the impact of the enhancement programme • Reducing the footprint of the existing assets/maximising energy recovery

19. Delivering our strategy – the role of employees • Employee engagement is crucial to change behaviour • Our employees can provide many ideas on reducing carbon emissions • Changed business processes are needed to embed carbon into decision making e.g. inclusion of cost of carbon into PR09 planning • Sector first in appointing full-time Carbon Manager to lead plan delivery • Carbon communications plan (both internal and external) in place to promote our carbon management agenda