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The CRC Energy Efficiency Scheme (CRC) Challenge
Henry Garthwaite, Business Development ManagerCarbon Trust StandardOctober 2009
Introduction
CRC Policy Context
Business opportunities
Practical next steps
Agenda
Our mission is to accelerate the move to a low carbon economy
We cut carbon emissions now
By providing business and the public sector with expert advice, finance and accreditationBy stimulating demand for low carbon products and services
We cut future carbon emissions
By developing new low carbon technologies through project funding and management, investment and collaborationBy identifying market barriers and practical ways to overcome them
Introduction
CRC Policy Context
Business opportunities
Practical next steps
Agenda
UK has 80% absolute GHG reduction objective by 2050 (~3% pa)– All sectors of the economy must contribute
Energy intensive industry/utilities already focused and regulated:– CCAs– EU ETS
Large non-energy intensive industry (and public sector) less focused historically:– Energy a small part of the cost base– Distributed, building energy use– Difficult to get senior mgmt buy-in– Lack of awareness, transaction costs
4MtCO2 pa saving by 2020 from 5000 CRC organisations
The Policy Challenge
The Policy Challenge
Total 54 MtC
Not covered by EU ETS,
CCA
UK business and public sector emissions (2002)
Coverage:– Direct emissions (fuel use)– Indirect emissions (electricity use) – key to efficiency in building
stock– 5000 largest organisations – beneath the EU ETS/CCA threshold
Requires senior engagement:– Senior mgmt engagement: organisational structure, strategy,
approach– Financial impact: budgeting + emissions reduction planning– Reputation impact: PR/comms– Legal impact: audit + compliance, evidence pack, spot checks +
penalties
Cost-efficient carbon savings:– Carbon trading means lowest cost savings are achieved– Guaranteed carbon savings outcome in 2nd ‘capped’ phase
The CRC policy response
What is the CRC?
Mandatory emissions trading scheme focusing on large non-energy intensive organisations– Minimum ½hrly metered electricity consumption of 6,000MWh in
calendar year 2008; equivalent to >~£500k spend– ~5,000 organisations, equating to emissions of ~50 MtCO2 not covered
by the EU ETS and CCAs
– Cover emissions starting from April 2010
Organisation based scheme, including direct and indirect emissions– Ultimate/nominated UK parent responsible for all subsidiaries’
emissions; including electricity and other direct fuel use
HMT revenue neutral design– Auction, with proceeds recycled to participants
Introduction
CRC Policy Context
Business opportunities
Practical next steps
Agenda
Key opportunities
Driving internal change:– Senior mgmt engagement + resources– Budget for carbon reduction projects– Focus on ‘cost of carbon’
Financial and reputational rewards, from effective carbon management:
– Absolute and relative emissions reduction – Early action
BUT: the biggest savings are from cutting emissions now – before the CRC: electricity cost ~ £150/tCO2
Good carbon management is key to seizing the CRC opportunity
1. Reduce direct emissions
2. Work with the supply chain to reduce theirs
3. Consider offsetting
Consistent, accurate measurement (carbon footprinting)
-25-20-15-10
-505
10152025
0 50 100
Cumulative CO2 savings (tCO2)
£ /
tC
O2
Project A
Project B
Project C
Project D
Project EProject F
Key component: Construction of abatement
cost curve
Illust
rativ
e
Focus of CRC
The Carbon Trust Standard - Recognition for real carbon reduction
Why– Stakeholder communication
– Employees, Customers, Government
– Motivation for future action– CRC “Early Action Metric” Benefit
Methodology– Independent, Transparent,
Robust, Based on GHG Protocol
Criteria– Actual footprint reduction over 3
years (Absolute or relative)– Management infrastructure to
enable continued reductionswww.carbontruststandard.com
Certify
Measure Manage
Reduce
Example certifications to date- 130+ certifications- 200+ customers
2011 2012 2013 2014£0
£2
£4
£6
£8
£10
Valu
e a
t sta
ke (
£/
tCO 2)
Absolute reduction Relative reduction
AMR (Smart metering) Carbon Trust Standard*
The Carbon Trust Standard is linked to initial CRC recycling payments
10% 20% 30% 40%
* Or ‘equivalent’ N.B. Figures are based on draft legislation
10,000 tCO2e footprint (~£1m-£1.5m energy bill)– £120k allowances p.a.– £120k 1st purchase– £24k at stake (2011)
Achieving the Standard will:– Boost league table ranking– Increase cash back
through recyclingAchieving certification now gets 2011 benefit
Introduction
CRC Policy Context
Business opportunities
Practical next steps
Agenda
Practical next steps
Issue Next step
Timeline and Rules
Read DECC CRC User Guide
CRC footprint Determine org structure, investigate property ownership / leases, determine emissions sources
Reduction + trading strategy
Construct ‘MACC’ graph + prioritise projects
Early action Contact Carbon Trust Standard team, evaluate AMR
Budget Engage finance team
Compliance + evidence pack
Engage legal and finance team
Reputation Engage senior mgmt + PR
Mobilise your team – across the organisation