Andrew Jones C.Eng. B.Eng. FIE MCIBSE Managing Director Sterling Carbon Management

1. - The Carbon Reduction Commitment Coming ready or not! Andrew Jones C.Eng. B.Eng. FIE MCIBSE Managing Director Sterling Carbon Management PART OF THE STERLING POWER GROUP

2. - The Carbon Reduction Commitment • My talk will cover: • a little about my involvement with CRC (since 2006) • is it good for business & the bottom line • the experiences & readiness of companies • managing challenges & risks

3. - and me June 1996 – March 2008: Head of Energy & Built Environment for FTSE100 Retailer June 2006: seconded to DEFRA as business advisor Working within the ‘EPC’ team for Philip Douglas Early 2006: formed REF - The Retail Energy Forum April 2008: formed SCM … which now runs REF … and does CRC+ work for some of them

4. … the Retail Energy Forum 2006 Mission Statement: - “to share best practice to reduce our carbon footprints” - and business - focus is on Climate Change, on risks … not just on costs!

5. - Climate Change … the risks

6. 15% increase - Climate Change … the policies Announcements 15 July by BIS, DECC, DfT • Low carbon Transition Plan • how the Government will meet the first five-yearly Carbon Budgets under the Climate Change Act • Low carbon Industrial Strategy • Government plans to support the UK’s low carbon technologies and services sector • Low carbon Transport Strategy • range of possible approaches for low carbon transport, including technology, alternative fuels, trading and behavioural changes • Renewable Energy Strategy • how to meet the targets under the Renewable Energy Directive Manage the bottom-line risk!

7. - in perspective Concentrate on the 8 pences not the half-pences. Save the lot not just the tax.

8. CRC - in perspective … and in focus

9. - and business • we need to mitigate & adapt to climate change • we need to make our contribution to GHG reduction • we need to manage the financial impact • business would like to have some control … not just be ‘hit’ by taxes • the CBI favours cap & trade methods to e.g doubling CCL • CRC provides - opportunity to trade - incentives for action - gets the attention of the Board … BUT

10. 39 41 20 40 27 33 40 30 30 53 17 30 13 37 50 50 20 30 - are we ready? agree disagree unsure I have all the information I need to be able to participate fully when the scheme is launched next April  I can comply with the Government’s requirements with existing staff I anticipate using external advice and support I think the scheme has a valuable contribution to make to a cleaner environment I believe the way the scheme has been costed seems fair I would like to meet with a group of other large energy customers to compare notes

11. - are we ready? “ • Very complex and elaborate scheme. • Scheme seems unfair to those companies who have already made investment to improve their efficiency & reduce carbon. • Internal staff can deal with the CRC but we will make selective use of external staff for specific energy efficiency projects. • We have concerns around the split of absolute/relative emission reductions in the reward mechanism, excessive penalties and the treatment of on-site renewable generation. • Not enough focus on the financial management of the scheme – i.e. getting financial executives involved. • I think it is important that the Government makes the right moves itself. “ • We will not be full participants but I believe that one day the bar will be lowered so that we will have to join.

12. Check Qualification Get ready to Register APRIL 2010 - are we ready? Check Qualification Get ready to Register Develop Carbon Reduction Plans Pay Fees Register Implement Carbon Reduction Plans Buy Allowances Report, report, report Keep going ‘for ever’ … Keep above the mid-point ‘for ever’?!

13. - registration: be ready! • What has to be done? • check if it means YOU. • if not full reporting .. then information disclosure? • get joined-up understanding in your company. • get your organisation mapped & contacts identified. • get your data marshalled and shipshape. • work out if applicable 90% is met from core sources .. prepare residual list? • decide if you want to report on 90% or 100%. • manage the impact by implementing CO2 reduction actions.

14. Climate Change - a final thought “tacking climate change could create opportunities for a company to increase its value by up to 80% if it is well positioned and proactive. Conversely it could threaten up to 65% of value if the company is poorly positioned or a laggard” Carbon Trust and McKinsey 2008

15. - The Carbon Reduction Commitment Andrew Jones C.Eng. B.Eng. FIE MCIBSE http://www.sterling-power.co.uk/ 0121 585 4080 PART OF THE STERLING POWER GROUP