Weekend Press: Thames Water could run out of money in months

In our latest round-up of the weekend’s national news coverage, Thames Water auditors warn that the country’s biggest water company could run out of funds by April unless shareholders inject more equity into the debt-laden firm. Elsewhere, COP28 President caused a stir by claiming there is “no science” indicating that a phase-out of fossil fuels is needed to restrict global heating to 1.5C, while in Cumbria heavy snow left thousands without power.

Thames Water could run out of money by April, auditor warns

Thames Water’s parent company could run out of money by next April if its shareholders don’t inject more equity into the debt-laden utility, its auditors have warned.

The group’s auditors, PricewaterhouseCoopers (PWC), said there is “material uncertainty” about its future because there are no firm arrangements in place to refinance a £190m loan held by one of the company’s subsidiary businesses.

Thames Water is set to face scrutiny over its debt levels and financing structure when its results are published on Tuesday.

Parliament’s Environment, Food and Rural Affairs Committee said it’s considering calling the firm’s executives in to explain whether they misled MPs about the company’s financial situation when they gave evidence in the summer.

The panel’s chair, Conservative MP Robert Goodwill, said on Friday: “Recent revelations of Thames Water’s financial situation raise further concerns about the stability of the company’s finances.”

In June, the water company entered emergency talks with the water regulator Ofwat, ministers and government departments after the exit of its chief executive and concerns over its ability to continue operating without a multibillion cash injection.

At the time, regulators suggested the company could be facing a hole of £10bn in its finances.

The business also faces breaching an interest cover covenant on a separate £200m loan by the same date “under a severe but plausible downside scenario,” PWC said. The disclosure was made in the 2022-23 accounts of Kemble Water Holdings, the top company in Thames’ ownership structure.

Thames Water shareholders have pledged to support the company, with a commitment in writing to inject £750m of further equity into the group. But PWC said that “the letter is not legally binding and there are no other firm commitments to refinance the £190m loan”.

In October, Ofwat said the firm had ‘significant issues’ to address. A spokesman said: “Thames Water must address their operational shortcomings and strengthen their financial resilience.”

The regulator has indicated that shareholders will need to put another £2.5bn into the business between 2025 and 2030.

A Thames Water Utilities Limited spokesman said: “We are in a robust financial position and are extremely fortunate to have such supportive shareholders”.

The Telegraph

Cop28 president says there is ‘no science’ behind demands for phase-out of fossil fuels

The president of Cop28, Sultan Al Jaber, has claimed there is “no science” indicating that a phase-out of fossil fuels is needed to restrict global heating to 1.5C, the Guardian and the Centre for Climate Reporting can reveal.

Al Jaber also said a phase-out of fossil fuels would not allow sustainable development “unless you want to take the world back into caves”.

The comments were “incredibly concerning” and “verging on climate denial”, scientists said, and they were at odds with the position of the UN secretary general, António Guterres.

Al Jaber made the comments in ill-tempered responses to questions from Mary Robinson, the chair of the Elders group and a former UN special envoy for climate change, during a live online event on 21 November. As well as running Cop28 in Dubai, Al Jaber is also the chief executive of the United Arab Emirates’ state oil company, Adnoc, which many observers see as a serious conflict of interest.

More than 100 countries already support a phase-out of fossil fuels and whether the final Cop28 agreement calls for this or uses weaker language such as “phase-down” is one of the most fiercely fought issues at the summit and may be the key determinant of its success. Deep and rapid cuts are needed to bring fossil fuel emissions to zero and limit fast-worsening climate impacts.

Al Jaber spoke with Robinson at a She Changes Climate event. Robinson said: “We’re in an absolute crisis that is hurting women and children more than anyone … and it’s because we have not yet committed to phasing out fossil fuel. That is the one decision that Cop28 can take and in many ways, because you’re head of Adnoc, you could actually take it with more credibility.”

Al Jaber said: “I accepted to come to this meeting to have a sober and mature conversation. I’m not in any way signing up to any discussion that is alarmist. There is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is what’s going to achieve 1.5C.”

Robinson challenged him further, saying: “I read that your company is investing in a lot more fossil fuel in the future.” Al Jaber responded: “You’re reading your own media, which is biased and wrong. I am telling you I am the man in charge.”

Al Jaber then said: “Please help me, show me the roadmap for a phase-out of fossil fuel that will allow for sustainable socioeconomic development, unless you want to take the world back into caves.”

“I don’t think [you] will be able to help solve the climate problem by pointing fingers or contributing to the polarisation and the divide that is already happening in the world. Show me the solutions. Stop the pointing of fingers. Stop it,” Al Jaber said.

Guterres told Cop28 delegates on Friday: “The science is clear: The 1.5C limit is only possible if we ultimately stop burning all fossil fuels. Not reduce, not abate. Phase out, with a clear timeframe.”

Bill Hare, the chief executive of Climate Analytics, said: “This is an extraordinary, revealing, worrying and belligerent exchange. ‘Sending us back to caves’ is the oldest of fossil fuel industry tropes: it’s verging on climate denial.”

“Al Jaber is asking for a 1.5C roadmap – anyone who cares can find that in the International Energy Agency’s latest net zero emissions scenario, which says there cannot be any new fossil fuel development. The science is absolutely clear [and] that absolutely means a phase-out by mid-century, which will enhance the lives of all of humanity.”

Prof Sir David King, the chair of the Climate Crisis Advisory Group and a former UK chief scientific adviser, said: “It is incredibly concerning and surprising to hear the Cop28 president defend the use of fossil fuels. It is undeniable that to limit global warming to 1.5C we must all rapidly reduce carbon emissions and phase-out the use of fossil fuels by 2035 at the latest. The alternative is an unmanageable future for humanity.”

Dr Friederike Otto, of Imperial College London, UK, said: “The science of climate change has been clear for decades: we need to stop burning fossil fuels. A failure to phase out fossil fuels at Cop28 will put several millions more vulnerable people in the firing line of climate change. This would be a terrible legacy for Cop28.”

Otto also rejected the claim that fossil fuels were necessary for development in poorer countries, saying that the latest report from the Intergovernmental Panel on Climate Change “shows that the UN’s sustainable development goals are not achievable by continuing the current fossil-driven high emission economies. [There are] massive co-benefits that come with changing to a fossil-free world”.

A spokesperson for Cop28 said: “The IEA and IPCC 1.5C scenarios clearly state that fossil fuels will have to play a role in the future energy system, albeit a smaller one. The Cop president was quoting the science, and leading climate experts.

“He has clearly said that the oil and gas industry must tackle scope 1 and 2 emissions [from their operations], must invest in clean energy and clean technologies to address scope 3 emissions [from burning fuels], and that all industry must align around keeping the north star of 1.5C within reach.

“Once again, this is clearly part of a continued effort to undermine the Cop presidency’s tangible achievements and a misrepresentation of our position and successes to date.”

The spokesperson said the presidency had operationalised the loss and damage fund with more than $700m, launched a $30bn private market climate vehicle, and brought 51 oil companies to agree decarbonisation targets and 119 countries to sign a pledge to triple renewable energy. “This is just the beginning,” the spokesperson said.

Al Jaber is also head of Masdar, the UAE’s renewable energy company, but his appointment as Cop28 president has been controversial. Shortly before the summit, leaked documents showed that the UAE had planned to use climate meetings with governments to promote oil and gas deals. Al Jaber denied having seen or used the talking points in the documents. Adnoc also has the largest net-zero-busting expansion plans for oil and gas, according to independent analysis.

The issue of a phase-out or phase-down is complicated by the terms not having agreed definitions and by the highly uncertain role of technologies to “abate” emissions, such as carbon capture and storage. “Keeping the Paris agreement targets alive will require a full fossil fuel phase-out, not a vague phase-down relying on unproven technologies,” said Otto.

More than 100 African, European, Pacific and Caribbean countries back a phase-out of unabated fossil fuels. The US, the world’s biggest oil and gas producer, also backs a phase-out. Others, such as Russia, Saudi Arabia and China, reject the call. Both options are on the table at Cop28, as well as proposals to only mention coal, or to not say anything at all about fossil fuels.

Cop26 in Glasgow in 2021 agreed for the first time to “phase down” coal use, but this had been watered down from “phase out” at the last minute, bringing the Cop26 president, Alok Sharma, to tears.

In his conversation with Robinson, Al Jaber also said: “A phase-down and a phase-out of fossil fuel in my view is inevitable. That is essential. But we need to be real serious and pragmatic about it.”

“Hold on. Let me just explain,” he said. “The world will continue to need energy sources. We [UAE] are the only ones in the world today that have been decarbonising the oil and gas resources. We have the lowest carbon intensity.”

This refers to the emissions from the energy used to extract fossil fuels, not the far larger emissions from burning the fuels. “There is no such thing as ‘low carbon’ or ‘lower carbon’ oil and gas,” said Otto.

Numerous commentators have said that negative or embarrassing revelations about Al Jaber and Adnoc increase the pressure on him to deliver a strong Cop28 deal.

The Guardian

Rolls-Royce boss: we expect to win nuclear SMR race

Rolls-Royce’s boss said he expects the FTSE 100 engine maker to win the multibillion-pound UK government energy contract to provide small modular nuclear reactors (SMRs), revealing he would be “very surprised” if it did not.

In his most bullish comments yet on Rolls’s chances in the government’s SMR competition, Tufan Erginbilgic said: “It’s not about whether we will be selected or not — I would be very surprised, frankly, if we are not. It will be hard to explain to anybody, to myself as well, [if the contract is not won by Rolls].”

Rolls-Royce is the only British company on a shortlist of six firms competing to become the first manufacturer of SMRs in the UK, with a potential £20 billion up for grabs. The reactors are designed to be built in factories and assembled on site, supposedly reducing the vast cost of nuclear power stations.

The chief executive, who took the controls of the engineer at the start of the year, told analysts he had pressed ministers for a firm commitment. “I said this to the government — frankly, very openly: you need to come with committed projects at the end of it so that we go into execution and with some funding.”

Erginbilgic added that Rolls-Royce was two years into the generic design assessment process for its SMR, noting: “We are actually ahead of anybody else.”

Rolls’s SMR is a version of the reactors it has produced for the Royal Navy’s nuclear submarines for decades. Other entrants in the competition are American companies GE Hitachi, Holtec, NuScale and Westinghouse, and French giant EDF. It is hoped contracts be awarded in the spring, for reactors that could power the grid by the 2030s.

SMRs have been touted as a way of speeding up delivery of nuclear projects, but there are few working examples globally as yet.

Yesterday, more than 20 countries at the Cop28 summit in the UAE pledged to triple the world’s output of nuclear power by 2050.

Separately, Erginbilgic said Rolls was working on ways to improve the resilience of its XWB-97 engines, which were criticised by Sir Tim Clark, president of the Emirates airline, for their inability to cope with sandy, desert conditions.

The Times

Cumbria snow: Thousands lose power as disruption continues

About 7,000 homes and businesses lost power after heavy snow in Cumbria caused widespread disruption.

Police declared a major incident on Saturday evening, with about 200 vehicles marooned and stranded people forced to use temporary accommodation.

Electricity North West (ENWL) said its network had been “severely impacted” by 20 instances of damage due to the snow.

Engineers were “battling treacherous conditions” and impassable roads to restore supplies, ENWL said.

Overnight reception centres were set up for those left stranded by the severe conditions, and emergency services worked to reach people trapped in vehicles.

Cumbria Police has renewed its appeal for people not to travel in the county unless necessary.

A multi-agency response was launched on Saturday after the Met Office issued an amber warning for snow.

It said 4-6in (10-15cm) was possible in some areas before snowfall eased overnight and into Sunday.

A new yellow warning for ice has since been issued, running from 17:00 GMT on Sunday until 12:00 GMT on Monday.

ENWL said it had restored some power by reconfiguring the network remotely, but some on-site repairs were needed.

Power to nearly 5,000 customers had been restored, but just over 2,000 remained without a supply, it said on Sunday.

Customer director Stephanie Trubshaw said: “These are without a doubt some of the worst conditions we have seen in terms of snow for several years.

“Teams worked into the night restoring power to customers but, as the snow continued to fall, further damage was caused to the network.”

Staff were being drafted in to contact customers and a helicopter had been enlisted to help identify damage, the company said.

A “small number” of properties might not have supplies restored until Monday, ENWL added.

Harrison Ward, a cook and author, said that following the heavy snow, Ambleside looked “beautiful” for those who had planned to stay in the area.

“Less so for those bunkered down in the village halls right now,” he posted on X, formerly Twitter.

“Roads still shut, don’t travel here. Roads at a standstill with abandoned cars as it is,” he said.

“Gritters and emergency services struggling to get through.”

BBC

Thérèse Coffey: A brain abscess nearly killed me. I blame stress

With her head banging and feeling increasingly unwell, Thérèse Coffey struggled through to the end of a debate on the reduction of plastic waste in the marine environment.

Although her response had been lucid enough and she was not slurring her words, the environment minister was suffering from brain fog.

Colleagues became so alarmed by her demeanour that her opposite number, Holly Lynch, even made inquiries after her health. Intervening in the half-hour debate, the Labour MP said: “I appreciate that the minister is not feeling very well this afternoon, and I commend her perseverance.”

“I wasn’t great, but I wasn’t slurring, I just wasn’t quite myself,” Coffey admitted in an interview this week. By the next day, the local elections of May 3, 2018, she was feeling even worse and began to realise “something was badly wrong”.

“I can always tell when I’m not well because I don’t eat, but also when I dragged myself out to vote, I couldn’t actually remember exactly where I lived,” she said. “Luckily there was another MP there who lived in the next door block to me. I knew what my name was and I knew which block I lived in, but I couldn’t remember exactly which [flat].”

Click here to continue reading.

The Times

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.