CRC Network | Financial Implications of the CRC on the Private Sector

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Financial Implications of the Carbon Reduction Commitment

for the Private Sector


The CRC Network Website


Over 500 Over 500 registered registered

members to members to datedate


Guest Speakers

Introduced by Andy Cartland, Managing Director, Acre

Chaired by Paul Druckman, Chairman, Trucost

Hugo Seymour – Carbon Consultant – Greenstone Carbon ManagementCost factors, scenarios and implementation effort for the CRC

Chris Newton – Head of Facilities Management – Lloyds Banking GroupCase study for Lloyds Banking Group: strategy, challenges and opportunities

Dr Bernd Leven – Senior Manager, Renewables, Energy & Carbon – BTCase study for BT: strategy, challenges and opportunities

Project Ed discussion document2 May 2007 Presentation to Jumeirah 4

Financial implications of the CRCFrom zero action to proactive management

CRC Network Event3 March, 2010

Overview

• The CRC cost factors

• Scenarios:

• Zero action

• Minimum compliance

• Proactive management

• Effort required to implement

The CRC cost factors

1. Allowance purchasing

a. Government sale

b. Secondary market

2. Fines and civil penalties

3. Reputation

Electricity consumption: 50,000 MWhResulting CRC footprint: 26,850 tCO2

7

Scenarios: Zero action, minimum compliance, proactive management

Zero Action Minimum compliance

Proactive management

Allowance cost

Recycling payment

£0

£0

£257,760

£238,428

£322,200

£346,365

Secondary market

£0 £96,660* £0

Fines £1,396,500 £0 £0

Reputational risk Very high High Low

* 20% of allowances bought on secondary market at £18 per tCO2

Cumulative cost of compliance

£1.4 M

£116 k

- £24 k

Effort required to implement

Benefit

Zero action

• Fine paying only

Minimum compliance

• Annual carbon calculation• Yearly data gathering for report preparation • Allowance purchasing at Government sale and from secondary market

Proactive management

• Monthly carbon measurement and monitoring• Programme of reduction initiatives• Carbon management to forecasts and carbon budgets

4th Vigo1-4 Vigo HouseLondonW1S 3HTT: 020 3031 4000W: www.greenstonecarbon.com

11

Chris Newton

Facilities Management Director

3 March 2010

CRC Network

The Financial Implications of the CRC Energy

Efficiency Scheme for the Private Sector

12

ENERGY: CRC and our commitment to reduce Consumption

Group Property are ensuring LBG are ready for the CRC CRC is a mandatory scheme, starting in April 2010, which aims to

improve energy efficiency and reduce the amount of carbon dioxide (CO2) emitted in the UK.

LBG meet the qualification criteria and must participate fully in the scheme.

The scheme has a number of detailed reporting and compliance requirements, as well as potential financial and reputation impacts based on performance in the scheme’s annually published league table.

Participating organisations must register for the scheme by 30 th Sept 2010 (or by 30th June 2010 if any significant group undertakings will be participating separately).

Participating organisations must accurately calculate their emissions (irrespective of the type of energy consumed), and purchase allowances, initially sold by Government, for each tonne of CO2 they emit.

During the introductory phase (Apr 2010 - Apr 2013) allowances will be sold at a fixed price of £12 per tonne of CO2, thereafter these become a market commodity. (NB the same carbon presently costs us circa £170 per tonne in purchased energy costs.)

The first sale of allowances is in April 2011 and Savings generated from increased energy efficiency will exceed the costs of participation.

Any organisation that does not comply with its legal obligations under CRC will be subject to financial and other penalties.

2

ENERGY - CRC PHASE 1 TIMELINE

2008 2009 2010 2011 2012 2013

January

December May November

April

September

April

July

October April

July

October April

July

01/01/2008

Start of Qualification Period for Introductory Phase

During 2008, participants with at least one HH meter settled on the half hourly market need to determine their total HH electricity consumption.

01/04/2010 - Start of the Introductory Phase

Start of the Footprint Year -Participants monitor their total energy use over the footprint year.

1st Annual Reporting Year -Participants monitor their energy use over the coming year 2010/11 in order to submit an annual report in July 2011. For this year only participants will not have to purchase CRC allowances.

Start of Registration Periodfor the introductory phase.

31/12/2008

End of qualification period for Introductory Phase.

The EA sends out information on CRC to all half-hourly billing addresses.

The EA sends out information on qualification guidance to all potential participants.

30/09/2010

End of registration period for Introductory Phase.

31/03/2011

End of footprint year for Introductory Phase.

End of first annual reporting year for Introductory Phase.

01/04/2011

Start of 2nd Annual Reporting Year -Participants should monitor energy use during the 2nd

year 2011/12.

1st sale of allowances -Participants pay for allowances to cover forecast 2011/12 emissions.

Start of 2nd Phase

1st Recycling payment

Revenue from 1st sale 2011/12 recycled.

Footprint Report due

Participants submit their Footprint based on 2010/11 footprint data.

1st Annual Report due

Participants submit an annual report on 2010/11.

2nd Annual Report due and allowances surrendered for the 2nd year 2011/12

Participants submit their Annual Report and surrender allowances for 2011/12.

3rd Report due and allowances surrendered for the 3rd year 2012/13

Participants submit their Annual Report and surrender allowances for 2012/13.

01/04/2012

Start of 3rd Annual Reporting Year -Participants should monitor energy use during the 2nd

year 2011/12.

2nd sale of allowances -Participants pay for allowances to cover forecast 2012/13 emissions.

2nd Recycling payment

Revenue from 2nd sale 2012/13 recycled.

Key Initiatives presently in train:• Lighting replacement • Building management system upgrade Dry cooler controls• Voltage optimisation - PowerPerfector units • BMS reconfiguration – upgrades et al• Boiler Burner Controls AMRs• Carbon Trust standard

BT is Driving Energy and Carbon ReductionDr. Bernd Leven – BT Energy and Carbon Unit

03 March 2010

© British Telecommunications plc

Energy and Carbon at BT?

• BT consumes 0.6% of the UK’s electricity (in top ten)

• Reduced our UK carbon footprint by 58% since 1996 (including renewable energy)

• Plans to reduce our UK carbon footprint by 80% by 2016

• Plans to reduce our global carbon intensity by 80% by 2020


BT’s energy and carbon strategy is global and includes travel, fleet, refrigerants, home workers etc.

Energy Efficiency

Generate Renewable Energy

Purchase Low Carbon Energy

In CRC Scope

Not In CRC Scope

Priority of Action

1

2

3

Building energy consumption in the UK


ICT enables other industries to reduce footprint

Source: The Climate Group and GeSi: Smart 2020 (2008)

Global Emissions in GtCO2e p.a.


Growth in services drives ICT energy consumption

Today Increase Future

Digital BritainSuper Fast Broad Band

TV via internetData Centre services for customers

Tenants in BT buildings

Reduction

Migration to 21 Century NetworkEnergy efficiency programmes


Strategy and Policy

Operations and Projects

Capital - Energy Saving

Energy Supply and Data Mgt

Energy and Carbon Services

Wind for Change Project

BT has established an Energy and Carbon Unit to develop business cases and drive down energy consumption and carbon emissions across the group

Energy Efficiency

Generate Renewable

Energy

Purchase Low Carbon

Energy


We have developed a CRC model to prioritise actions that deliver the greatest benefits

ModelEnergy

Consumption

Carbon Trust Standard

Certification

Automated Metering (AMR)

Assumptionson other

participants

League Table Position

Cash Flow

Bonus or Penalties

Risks

Focus for action


Focus of our strategy are …

• Carbon Trust Standard Certification

• Automated Metering (AMR)

• Energy consumption

Achieved in Feb. 2009

Installed voluntary AMR for 96% of the electricityof BT’s 6,000 sitesRolling-out Gas AMR

Launched Energy Savings Programme in 2008 andcapital investment programme in 2009

0

500

1,000

1,500

2,000

2,500

3,000

3,500

19

96

/97

19

98

/99

20

00

/01

20

02

/03

20

04

/05

20

06

/07

20

08

/09

UK Energy Consumption in 1,000 MWh/a

Electricity

Oil

Gas

0

20

40

60

80

100

120

140

160

20

04

/05

20

06

/07

20

08

/09

UK Energy Consumption per Turnover in MWh/£m


• Corporate real estate rationalised

• Flexible workers are able to work from nearest office, home or customer site

• Home worker impact understood and mitigated

• Technology optimised to enable CO2 reductions from business activities

• Business travel reduced• Business costs reduced

Carbon Efficient Agile Organisation

• Information Communication Technology is regarded as a net CO2 producer

• Corporate Real Estate is not optimised for flexible working

• All workers commute to the office, mainly by car

Carbon inefficient organisation with traditional

working practices

Corporate Agility can reduce your CRC exposure

Operational Efficiency in

ICT

Agile Working Transformation

Carbon Impact

Assessment

Corporate Real Estate Assessmen

t


Conclusion and Recommendation

• The CRC – Is an additional driver to reduce energy consumption– Main driver is energy cost reduction

• BT – Is in a good starting position for the CRC

(Early action and saving programmes)– Enables your organisation to reduce energy consumption

and carbon footprint


We provide services to reduce energy consumption and carbon emissions

SustainabilityStrategySustainabilityStrategy

Sustainability Business OperatorPortfolio of Off-the-shelf ServicesSustainability Business OperatorPortfolio of Off-the-shelf Services

ImplementationImplementation

PlanningPlanning

AssessmentAssessment

IT ServicesIT Services

WorkforceWorkforce

Flexible Workforce

Conferencing

Mobility Solutions

Field Force Automation

CRMCRMDataCentresDataCentres

Low Carbon Managed Application

Lower Carbon Hosting and Storage

Energy Efficiency Improvement

UnifiedComms.UnifiedComms.

Unified CommunicationsOne voice

Video Conferencing

MonitoringMonitoringUnifiedInfrastructureServices

Smart Customer Interactions

Homeshoring (UK only)

Contact Centre Efficiency

Professional Services (IT Audit)

Integrating Network & IT services

Operational Efficiency

For further information please contact Ted Shann [email protected] or tel. 0118 982 1382


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