Transcript Climate Change Policy Update RCSG 17 October 2013

Welcome
Climate Change Agreements Workshop
28 November 2014
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Programme
10:45
Session 1 - How the Climate Change Agreements (CCAs) work
• CCA overview & timelines
• Participants’ CCA commitments
• Eligibility and targets
12:00
COFFEE
12:15
Session 2 – Maintenance of CCAs
12:30
• Changes to CCAs
• Claiming Climate Change Levy (CCL relief)
12:45
LUNCH
14:00
Session 3 – CCA performance reporting
14:15
• CCA performance calculations and reporting to CIABATA
• Managing compliance and possible audits
15:00
Roundup / TEA / further Q&A
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Session 1 - How the CCAs work
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How the CCAs work
• CCA overview & timelines
• Participant’s CCA commitments
• Eligibility and targets
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CCA overview – principles and benefits
•
Join through the sector association for your activity
•
Eligibility – energy intensive industries exposed to international competition
– Facilities with Environmental Permitting Regulation part A installations
•
Participants commit to challenging but achievable energy efficiency targets
to 2020 in exchange for relief from the Climate Change Levy (CCL)
•
CCA facilities are also exempt from the Carbon Reduction Commitment
(CRC) and its £16/tCO2 annual charge for all emissions
•
A more sustainable instrument for industry to contribute to carbon
reductions…..
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CCA overview - roles
•
The Department of Energy and Climate Change (DECC) sets CCA policy
•
The Environment Agency (EA) is the Administrator – implements policy and
administers the scheme through a web-based Register
•
CIABATA is a subsidiary of CIA
-
Represents CCA participants’ interests with DECC and EA
-
Negotiates targets with DECC
-
Sector interface with EA – administration of new entrants and supports
sites’ ongoing participation
-
Collects performance against targets for on-reporting to EA and assists
with changes to agreements
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Chemical sector CCA target negotiation
1.050
Energy efficiency target , 2008=1.000
• DECC proposed
13.5%
1.000
• CIABATA negotiated
11.2%
0.950
• 230 sites, individual
targets as per survey
0.900
-
• £50m p.a. Climate
Change Levy saving
- 90% power
0.850
- 65% gas
0.800
• £25m p.a. CRC
Energy Efficiency
Scheme saving
• £7m compliance costs
per target period
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Duration of CCAs and CCL relief
Target review
Sign-up &
CCL relief
1 Apr 2013
CCL relief
renewed
1 Jul 2015
Scheme ends
31 Mar 2023
Certification
Targets
Baseline
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Targets 2013-2020 – 4 consecutive target periods
Jan’13 – Dec’14
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Jan‘15 – Dec’16
Jan’17 - Dec’18
Jan’19 - Dec’20
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CCA overview - compliance
•
Examination against CCA targets every 2 years
-
CCA Performance Calculation Spreadsheets for detailed calculations
-
CIABATA web-forms to report headline data
•
Target shortfalls are met by paying a £12/tCO2 buy-out price
•
Target overachievements can be used for own compliance with future targets
•
Sanctions for:
-
Non-reporting and misreporting
-
Failing to comply with targets
-
Failing to notify EA of changes / provide information EA request
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EA Reduced Rate Certificate
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How the CCAs work
• CCA overview & timelines
• Participants’ CCA commitments
• Eligibility and targets
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Participant agreement documents
Document
With
Comment
Underlying
agreement
EA
Target and operator obligations
Participation
agreement
CIABATA
Obligations to each other
Facility eligibility
form
EA
Defines eligible facility
Only supplied for charges on pre-existing CCA
eligibility definition (PP4 eligibility form)
Bottom-up Data
Survey
CIABATA
Baseline data and target submission
2019-2020 targets tightened by 0.1% in negotiation
with DECC
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3 chemical sector CCA agreements
Sign-up is electronic
Environment
Agency
Umbrella
agreement
CIABATA
Underlying
Agreement
(entered by email assent)
Participating
company
Participation Agreement
(Entered by agreement to enter Xls form)
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Underlying agreement
Eg:
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Eg:
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Not included for
Novem in energy
targets as same as
baseline energy
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Underlying Agreement - settings and terminology
Item
Comment
Facility
Participating site or part of site
Target unit
A facility or group of facilities covered by a CCA target
CCA contacts
Responsible Person (gives legal assent)
Administrative Contact (manages the CCA)
Facility Contact (not in UA – works with admin contact)
Target
currency
“Novem in energy” = energy efficiency
“Absolute in energy”
Target %
reduction on
base year
From Bottom-up Data Survey:
EITHER - Reduction in Novem ratio (energy efficiency ratio)
OR - absolute energy in GJ
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Sanctions
• Penalty for minor infringements (10% CCL saving in 2008)
– Failure to report on time
– Failure to meet other info request
– Failure to notify EA of need for a variation (within 20 working days)
• Minor infringement penalty + buy-out-fee
– Failure to meet target (error in milestone report)
• Decertification – reporting but not complying
• Termination – failure to report or pay a penalty
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How the CCAs work
• CCA overview & timelines
• Participants’ CCA commitments
• Eligibility and targets
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Facility eligibility form (pre-existing PP4 eligibility form)
• Eligibility form defines the activities within the CCA Facility covered by
the CCA (usually = whole site)
• At sign up new forms submitted for
– New entrants / facilities
– Eligibility changes, e.g. making use of 70/30 rule (formerly 90/10)
• Categories of activities:
 Eligible process – Permitted activities / activities listed in part 2 of
the Environmental Permitting Regulations 2010 (+updates)
+ Directly associated activities - on-site, support eligible process,
capable of affecting emissions (Q7)
+ 70/30 activities – non-EPR, <30% of whole site consumption OR
activities up to addition 3/7ths if >30%
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Eligibility – 70/30 rule
shares of energy (primary fuel input basis)
Eligible
50%
Directly
associated
20%
storage
air / water
abatement
waste treatment
EPR processes
(incl pilot plant
for commercial
purposes)
Offices / canteen
Ind gases
R&D
70/30
30%
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CCA targets – Bottom-Up Data Survey
Section
Content
General
information
Site(s) covered, eligibility changes and contacts
Target Unit
Summary
Summary of baseline consumption, throughput and energy
efficiency and projected targets
Baseline fuel
summary
Baseline (2008) consumption by fuel
Efficiency drivers
Projected penetration of energy efficient technologies
Product mix
sheets
Supports Novem approach - one per product group in the CCA
target unit
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Look in product mix
sheet(s) for throughput
measurement basis
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Feedstocks
Primary
fuels
P
Electricity
from the grid
Site boundary
Final consumption
(F)
(P)
P
Oil
3rd party high
efficiency
electricity
& steam
generators
F
Process
energy
consumption
for chemicals
production
P by-products
Gas
P
P
Coal
P
Waste
P
Renewables
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Other steam from
chemical
plants?
F
F
On-site
generation of
electricity and
steam by
CHP
F
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Energy and throughput accounting rules (1)
• Include ALL energy combusted for direct and indirectly supplied heat and
power
• Exclude
– Use of energy as feedstock
– Exothermic heat
– Energy regulated under the EU Emissions Trading Scheme (EU ETS)
– On-supplies
• Include:
– By-products and waste and used as fuel
– Renewable energy
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Energy and throughput accounting rules (2)
• Gross calorific value (GCV) basis in Gigajoules - use specific supplier
factors where possible, own analysis of non-standard (on-site fuels) or
specific or nearest standard factor (consistency the key).
• Secondary fuels must be on a primary fuel input basis:
– Average Grid generation efficiency factor: x2.6
– CHP plants - algorithms to assess inputs to non-renewable (gas-fired)
schemes that on-supply and/or export to the grid and to all renewable
schemes
• Throughput measure(s)
– See Bottom-Up Data Survey for throughput measures for product
group(s)
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Feedstocks
Primary
fuels
P
Electricity
from the grid
Site boundary
Final consumption
(F)
(P)
P
Oil
3rd party high
efficiency
electricity
& steam
generators
F
Process
energy
consumption
for chemicals
production
P by-products
Gas
P
P
Coal
P
Waste
P
Renewables
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Other steam from
chemical
plants?
F
F
On-site
generation of
electricity and
steam by
CHP
F
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EU Emissions Trading Scheme (EU ETS)
• Targets – “CCA Target Facility” excludes energy regulated by the EU ETS within
the CCA Facility (usually leaving grid electricity)
• Whole CCA Facility entitled to CCL relief, recertified if meet both
1. CCA Target Facility Target
2. EU ETS permit requirements
• Therefore eliminates policy overlaps with no loss of CCL relief –
simplification?
• Problem of volatile grid imports if CHP is “carved-out” - some have opted to
use CHP Special Reporting Method (SRM) to address this:
– Throughput measure = throughput (eg: tonnes) x grid intensity factor
– Where grid intensity = grid use / (CHP + grid power) – delivered basis
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Target currency
• Novem in energy (energy efficiency)
– Relative target provides for growth but difficult to meet in a
recession
– Novem eliminates product mix distortions
• Absolute energy
– Absolute target suited to falling throughput and / or large
efficiency gains,
– Target is tightened if throughput falls below 90% of baseline
(2008) levels
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Product mix approach (Novem)
• Energy efficiency = Specific Energy Consumption (SEC) =
energy consumption, GJ
throughput (eg: in tonnes)
• Relative energy target ratio (EER) =
 [projected throughput(s) x target SEC(s)]
 [projected throughput(s) x 2008 SEC(s)]
expected energy consumption
reference use (baseline adjusted for expected throughput)
– Pure efficiency measure, free of product mix distortions
– Target can be adjusted for actual product mix at reconciliation
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Novem approach is free of product mix distortions
2008 base data
E.cons Output
GJ
tes
P1
6,000
1,000
P2
6,000
12,000
Total site
2013/14
SEC
GJ/te
E.cons Output
SEC Ref Cons
GJ
tes
GJ/te
GJ
6.0
12,000
2,000
6.0
12,000
3,000
2.0
3,000
3,000
1.0
6,000
4,000
3.0
15,000
5,000
3.0
18,000
Relative energy ratio =
2013/14 energy consumption
reference energy consumption
Site target EER
= 3.0 / 3.0
P.mix approach EER
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= 1.000
= 15,000 / 18,000
= 0.833
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Summary / conclusions
• CCAs are a more sustainable instrument for industry
to contribute to carbon reductions
• Supporting data for Underlying Agreement
commitments is in the Bottom-Up Data Survey
• Changes and updates – are there any to notify –
baseline data errors, eligibility, contacts?
• Are there preparations needed for performance
reporting?
– Dry-run this year
– Formal exercise (2 Feb 2015 to 20 Mar 2015)
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