carbon reduction commitment aea is the government adviser contracted to develop the crc scheme
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Carbon Reduction Commitment AEA is the Government adviser contracted to develop the CRC scheme. A world leading energy and climate change consultancy. Stephen Boyle , Principal Consultant, Climate Change and Policy 1 st June 2009. About AEA. - PowerPoint PPT PresentationTRANSCRIPT
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Carbon Reduction CommitmentAEA is the Government adviser contracted to develop the CRC scheme
Stephen Boyle, Principal Consultant, Climate Change and Policy
1st June 2009
A world leadingenergy and climatechange consultancy
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• 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 supporting
DECC as it develops
the regulations
for CRC
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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
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But do you qualify for CCA exemption?
No
Yes
You are covered
You are not covered
No
Total HHM electricity use > 6000MWh/year?
You are not covered
Yes
Qualification Process
-
Mandatory half hourly metered (HHM) electricity?
Declare exemptionBy 31st July 2011
Declare qualification statusApril – Sept 2010
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What’s covered
CCA emissions
EUETS emissionsNon-core sources
Core sources
Based on emissions in the period April 2010 to March 2011
Reported by 31st July 2011
Based on emissions in the period April 2010 to March 2011
Reported by 31st July 2011
All energy consumed for non-transport purposes
•Electricity•Gas•Oil, diesel etc
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• 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
Annual reporting
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Capped phase (auctions)
Capped phase (auctions)
Sales and recycling
April 2010 April 2011 April 2012 April 2013
Scheme starts
First sale (double)
First recycle (double)
Second sale (single)
Second recycle (single)
First auction (single)
Introductory phase (£12/t sales)Introductory phase (£12/t sales)
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Stirling’s value at risk
• Stirling’s 2007/08 Energy usage kWh kgCO2- Electricity 19,142,427 10,279,484 - Gas 31,577,573 5,841,851- Oil 1,616,065 430,070- Renewable 0 0- Others 0 0- Total 52,336,065 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
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• Early action, prior to April 2011
• Percentage emissions reduction - absolute
• Percentage reduction in emissions/turnover - growth
• Performance is assessed against a 5 year rolling average
The league table
Early action
Growth metric
Absolute emissions
Early action
Growth metric
Absolute emissions
0%
10%
20%
30%
40%
50%
60%
Year (starting April)M
ax b
on
us/
pen
alty
(Double recycle)
2010 2011 2012 20142013
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Recycle payments
Base payment• Each participant’s share of emissions in
2010/11 multiplied by total recycle pot each year
League table bonus/penalty2
• Annual assessment against metrics – your score
• Ranking of all participants – the league table• Bonus/penalty
Adjustment factor3 • Ensure sum of recycles equals total pot
1
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In summary - what to do and when
Registration
Preliminary Report
Annual compliance
01/08 07/08 01/09 07/09 01/10 07/10 01/11 07/11 01/12 07/12
Emission period
Reporting period
Emission period
Reporting periodKey
HH Electricity
All energyEUETS,
CCA
Annual emissions, turnover, early action
Annual emissions, turnover
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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
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• 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
Compliance preparation
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• Review significance
- Emissions within landlord’s responsibility
- Significance
- Risk of pass-through / lease strategy
Landlords and tenants
Responsibility for emissions will lie with the counter party to the
energy supply contract
Responsibility for emissions will lie with the counter party to the
energy supply contract
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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
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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
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• 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
Preparing for the CRC - Summary
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Carbon Reduction Commitment
Stephen Boyle, Principal Consultant, Climate Change and Policy0870 190 6804, [email protected] June 2009