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Carbon Reduction Commitment AEA is the Government adviser contracted to develop the CRC scheme

Carbon Reduction Commitment AEA is the Government adviser contracted to develop the CRC scheme. A world leading energy and climate change consultancy. Daniel Waller , Knowledge Leader, Carbon Management 0870 190 6297, daniel.waller@aeat.co.uk.

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Carbon Reduction Commitment AEA is the Government adviser contracted to develop the CRC scheme

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  1. Carbon Reduction Commitment AEA is the Government adviser contracted to develop the CRC scheme A world leadingenergy and climatechange consultancy Daniel Waller, Knowledge Leader, Carbon Management 0870 190 6297, daniel.waller@aeat.co.uk

  2. Global business supporting public and private sectors Energy and climate change Air and water quality Risk management and due diligence Resource efficiency Sustainable transport Innovation and knowledge transfer Sustainability Information technology and environmental management About AEA AEA is supportingDECC as it developsthe regulations for CRC

  3. What is the CRC? • Mandatory auction-based emissions trading • Climate Change Bill commitment • Public and private sector • Applies at highest UK parent organisation level • Purchase allowances to match emissions from Government at 12/tCO2 • Receive money back +/- bonus/penalty dependent on relative performance

  4. No You are not covered Yes Declare qualification status April – Sept 2010 Qualification Process No Mandatory half hourly metered (HHM) electricity? You are not covered - Yes Total HHM electricity use > 6000MWh/year? You are covered

  5. Emissions responsibility Person that is the customer of a supply contract and receives the supply from the energy provider under that contract • Landlords may be responsible for tenant emissions • Energy Service Companies may be responsible for customer emissions • Key issues for landlords: • Uncontrolled CRC exposure and possible net costs • Incentives for emissions savings • Cost recovery or measures to reduce exposure

  6. Franchises Agreement between parties where franchisee sells or distributes goods, or provides services, and equips or presents its premises as instructed by “the franchisor” • Franchisor takes on CRC liability (Responsible Person) • Franchisee has “reasonable assistance duty” (Associated Person) • Particularly relevant for: • Fast food, retail, telecoms, petrol stations, car dealerships, trade associations, some Universities • Challenges: • Data management • Scheme economics – pass through of costs / benefits • Delivering energy management

  7. (>6,000 MWh in 2008) • Principal subsidiaries • - Identified in reporting and annex to league table • - Eligible for baseline updates - “Designated Changes” Principal Subsidiaries Subsidiary 2 Subsidiary 3 Subsidiary 4 - - - Subsidiary 1 Parent Organisation

  8. Joint ventures/PFI - Where no majority shareholder Company participates in its own right – if it qualifies - Otherwise grouped with majority owner Joint Ventures / PFI Parent Organisation Subsidiary 2 JV 1: 50/50 Ownership JV 2: 70:30 Ownership Subsidiary 1 (>6,000 MWh in 2008) - - - -

  9. What’s covered - ‘Footprint’ • All energy consumed for non-transport purposes • Electricity • Gas • Oil, diesel etc CCA emissions Core sources Based on emissions in the period April 2010 to March 2011 Reporting will be by 31st July 2011 EUETS emissions Non-core sources

  10. Annual reporting • Financial year compliance cycle • Evidence pack and source list • Apply rules for renewable generation, export of power from own generation, heat from CHP • Report this by end July after the year end and surrender allowances • Audit not verification

  11. Civil Penalties • Failure to register (£5,000 + £500 per day) • Failure to disclose information (£1,000) • Failure to provide footprint report (£5,000 + £0.05/tCO2/day for 40 days) • Failure to provide annual report (£5,000 + £0.05/tCO2/day for 40 days then doubled) • Incorrect reporting (£40/tCO2 for emissions incorrectly reported) • Failure to surrender sufficient allowances (£40/tCO2 for each tCO2 shortfall) • Failure to keep adequate records (£5/tCO2)

  12. In summary - what to do and when 01/08 07/08 01/09 07/09 01/10 07/10 01/11 07/11 01/12 07/12 Registration HH Electricity Preliminary Report All energy EUETS, CCA Annual emissions, turnover, early action Annual compliance Annual emissions, turnover Emission period Reporting period Key

  13. Sales and recycling April 2010 April 2011 April 2012 April 2013 Scheme starts First sale (double) Second sale (single) First auction (single) First recycle (double) Second recycle (single) Capped phase (auctions) Introductory phase (£12/t sales)

  14. The league table • Percentage emissions reduction - absolute • Percentage reduction in emissions/turnover - growth • Early action, prior to April 2011 • Performance is assessed against a 5 year rolling average 60% 50% 40% Max bonus/penalty 30% 20% 10% 0% 1 2 3 4 5 Year Early action Growth metric Absolute emissions

  15. Emissions metrics • % change in emissions compared with previous 5 year average Absolute metric • % change in emissions/turnover compared with previous 5 year average Growth metric • % AMR coverage • % CT Standard coverage Early action metrics • Revenue applied for Local Authorities/Universities rather than turnover • Based on available data until 5-year history established

  16. Early action – CT Standard • Early action – by March 2011 • The Carbon Trust Standard • Measure your footprint (more than required by CRC) • Demonstrate reduction (absolute or relative > 2.5% p.a.) • Demonstrate good carbon management • Is it worth it from a CRC perspective?

  17. Early Action Metric - AMR • Automatic Meter Reading (AMR) • Electricity and gas • There will be a minimum standard • Capture storage and retrieval for data • Half hour frequency • Software for data manipulation Participants should consider AMR as part of a metering, monitoring and targeting strategy – not just for CRC in isolation

  18. Your action plan - today • Understand your liability • Understand Organisational structure (CCA/EU ETS) • Meter audit – H/H electricity will determine liability • 2008 HH Electricity data • Sources of emissions (core and non-core) • At least 90% of total emissions to be included • Costs/Benefits of including >90%?

  19. Your action plan - today • Understand your abatement options • Prepare a MACC? • What do you want out of the scheme? • Compliance? • Financial rewards – Energy vs. Carbon? • Brand rewards? • Evaluate early action metrics

  20. Preparing for the CRC - Summary • Work out your organisation structure • Know your emissions exposure • Understand your compliance obligations • Make sure your systems are in place to gather and manage data and forecast emissions • Understand your abatement opportunities • Take a proactive approach to the opportunities the scheme presents

  21. Carbon Reduction Commitment Daniel Waller, Knowledge Leader, Carbon Management 0870 190 6297, daniel.waller@aeat.co.uk

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