Transcript Carbon Reduction Commitment, AEA Consultants - Stephen

Carbon Reduction Commitment
AEA is the Government adviser contracted to
develop the CRC scheme
Stephen Boyle, Principal Consultant, Climate Change and Policy
1st June 2009
A world leading
energy and climate
change consultancy
About AEA
• Global business supporting public and
private sectors
- Energy and climate change
- Air and water quality
- Risk management and due diligence
- Resource efficiency
- Sustainable transport
AEA is supporting
- Innovation and knowledge transfer
DECC as it develops
- Sustainability
- Information technology and
environmental management
the regulations
for CRC
What is the CRC?
•
Mandatory auction-based emissions trading
•
Enabling powers Climate Change Bill
•
Public and private sector
•
Covers all non-transport energy emissions
•
Applies at highest UK parent organisation
•
Requires participants to monitor energy use and trade emissions allowances
•
Starts in April 2010 but preparation starts now
Qualification Process
Mandatory half hourly
metered (HHM) electricity?
-
No
You are not covered
Yes
Total HHM electricity use >
6000MWh/year?
No
You are not covered
Yes
You are covered
Declare qualification status
April – Sept 2010
But do you qualify for CCA
exemption?
Declare exemption
By 31st July 2011
What’s covered
All energy consumed for non-transport purposes
•Electricity
•Gas
•Oil, diesel etc
Core sources
CCA emissions
Non-core sources
EUETS emissions
Based on emissions in the period April 2010 to March 2011
Reported by 31st July 2011
Annual reporting
• Financial year compliance cycle
• Purchase Allowances for the year
• Evidence pack and source list
• Report emissions by end July after the year end and surrender
allowances
• Audit not verification
• Rules for renewable generation, export of power from own
generation, heat from CHP
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)
Introductory phase (£12/t sales)
Capped phase
(auctions)
Stirling’s value at risk
• Stirling’s 2007/08 Energy usage
-
Electricity
Gas
Oil
Renewable
Others
Total
kWh
19,142,427
31,577,573
1,616,065
0
0
52,336,065
kgCO2
10,279,484
5,841,851
430,070
0
0
16,551.405
• Stirling’s CRC Auctioning Revenue for the fixed price phase
- 10/11 – 16,552 number of allowances at £12/CO2 - £198,624 – ±10% - VAR £39,725
- 11/12 – 16,552 number of allowances at £12/CO2 - £198,624 – ±10% - VAR £39,725
- 12/13 – 16,552 number of allowances at £12/CO2 - £198,624 – ±20% - VAR £79,450
• Stirling’s CRC Auctioning Revenue for the following 3 years (at 2.6% GDP*)
- 13/14 – 16,552 number of allowances at £12.30/CO2 - £203,590 – ±30% - VAR £121,154
- 14/15 – 16,552 number of allowances at £12.60/CO2 - £208,555 – ±40% - VAR £166,844
- 15/16 – 16,552 number of allowances at £13.00/CO2 - £215,176 – ±50% - VAR £215,176
• Total Value at Risk for Stirling over 3 year fixed price period £158,900
*HM Treasury Mid-Term Forecast Report Feb 2009
The league table
60%
• Early action, prior to April 2011
• Percentage emissions reduction absolute
• Percentage reduction in
emissions/turnover - growth
Max bonus/penalty
50%
40%
30%
20%
10%
0%
2010
2011
2012
2013
2014
Year (starting April)
• Performance is assessed against a
5 year rolling average
(Double recycle)
Early action
Growth metric
Absolute emissions
Recycle payments
1
•
Each participant’s share of emissions in
2010/11 multiplied by total recycle pot
each year
•
•
•
Annual assessment against metrics – your
score
Ranking of all participants – the league table
Bonus/penalty
•
Ensure sum of recycles equals total pot
Base payment
2
League table
bonus/penalty
3
Adjustment
factor
In summary - what to do and when
01/08
Registration
Preliminary
Report
Annual
compliance
07/08
01/09
07/09
01/10
07/10
01/11
07/11
01/12
07/12
HH Electricity
All energy
EUETS,
CCA
Annual
emissions,
turnover, early
action
Annual emissions,
turnover
Key
Emission period
Reporting period
Key features
• Compliance preparation
- Registration
- 2010/11 footprint data (2010/11 will be base element for recycle payments)
- Annual compliance
• League table
- Metrics and emissions performance
- Carbon Trust standard and automatic meter reading
- Recycle payments and reputational impacts
• Landlord / tenant responsibilities
• Trading strategy and cash flow implications
Compliance preparation
• You should produce a detailed compliance action plan
- Milestones
- Data requirements
- Responsibilities
• Assess your readiness for scheme compliance
- Building on carbon targets
- Actions to overcome shortfalls
- Evidence pack requirements
- Confirm additional sources position
• AEA could support your formal submissions process
Landlords and tenants
Responsibility for emissions will lie with the counter party to the
energy supply contract
• Review significance
- Emissions within landlord’s responsibility
- Significance
- Risk of pass-through / lease strategy
A successful trading strategy
• Understand your abatement options
• Forecast your business as usual emissions
• Understand how the sale/auction will work
• Recognise the risks
- Others will be bidding in the auction so you may not get what you want
- The alternative to the sale is the secondary market/safety valve
Your approach to CRC
• The scheme has many opportunities to
win or lose:
- League table – good emissions performance
- League table – early action metrics
- Landlord and tenant arrangements
- Non-core sources
- Successful trading strategy
A proactive approach to the CRC will reap greater
rewards than a simple compliance outlook
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
Carbon Reduction Commitment
Stephen Boyle,
Principal Consultant, Climate Change and Policy
0870 190 6804, [email protected]
1st June 2009