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Responsible Care‘you can’t live without us’‘you can’t live without us’ Responsible Care

WelcomeClimate Change Agreements Workshop

28 November 2014

Responsible Care‘you can’t live without us’

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 CCAs12:30 • Changes to CCAs

• Claiming Climate Change Levy (CCL relief)

12:45 LUNCH

14:00 Session 3 – CCA performance reporting14:15 • CCA performance calculations and reporting to CIABATA

• Managing compliance and possible audits

15:00 Roundup / TEA / further Q&A

Responsible Care‘you can’t live without us’‘you can’t live without us’ Responsible Care

Session 1 - How the CCAs work


How the CCAs work

• CCA overview & timelines

• Participant’s CCA commitments

• Eligibility and targets


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…..


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


Chemical sector CCA target negotiation

• DECC proposed 13.5%

• CIABATA negotiated 11.2%

• 230 sites, individual targets as per survey

• £50m p.a. Climate Change Levy saving

- 90% power

- 65% gas

• £25m p.a. CRC Energy Efficiency Scheme saving

• £7m compliance costs per target period

0.800

0.850

0.900

0.950

1.000

1.050

Energy efficiency target , 2008=1.000

-


Duration of CCAs and CCL relief

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

BaselineTargets

Certification

Sign-up & CCL relief1 Apr 2013

CCL relief renewed 1 Jul 2015

Scheme ends31 Mar 2023

Targets 2013-2020 – 4 consecutive target periods

Jan’13 – Dec’14 Jan‘15 – Dec’16 Jan’17 - Dec’18 Jan’19 - Dec’20

Target review


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


EA Reduced Rate Certificate


How the CCAs work


• Participants’ CCA commitments



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 facilityOnly supplied for charges on pre-existing CCA eligibility definition (PP4 eligibility form)

Bottom-up Data Survey

CIABATA Baseline data and target submission2019-2020 targets tightened by 0.1% in negotiation with DECC


3 chemical sector CCA agreementsSign-up is electronic

Environment Agency

Participating companyCIABATA

Umbrellaagreement

UnderlyingAgreement

(entered by email assent)

Participation Agreement(Entered by agreement to enter Xls form)


Underlying agreement


Not included for Novem in energy targets as same as baseline energy


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


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


How the CCAs work


• Participants’ CCA commitments



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%


Eligibility – 70/30 ruleshares of energy (primary fuel input basis)

70/3030%

Eligible50%

Directly associated

20%

EPR processes

(incl pilot plant for commercial

purposes)

Offices / canteenInd gases R&D

storageair / waterabatementwaste treatment


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


Look in product mix sheet(s) for throughput measurement basis


Electricity from the grid

3rd party high efficiency electricity & steam

generators

Other steam - from

chemical plants?

On-site generation of electricity and

steam by CHP

Process energy

consumptionfor chemicals

production

by-products

Primary fuels

(P)

Oil

Gas

Coal

Waste

Renew-ables

P

P

P

P

P

P

F

FF

Final consumption

(F)

F e e d s t o c k s

Site boundary

P

F


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


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)


Electricity from the grid

3rd party high efficiency electricity & steam

generators

Other steam - from

chemical plants?

On-site generation of electricity and

steam by CHP

Process energy

consumptionfor chemicals

production

by-products

P

P

P

P

P

P

F

FF

Final consumption

(F)

F e e d s t o c k s

Site boundary

P

F

Primary fuels

(P)

Oil

Gas

Coal

Waste

Renew-ables


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 both1. CCA Target Facility Target2. 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


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


Product mix approach (Novem)

– Pure efficiency measure, free of product mix distortions

– Target can be adjusted for actual product mix at reconciliation

• Relative energy target ratio (EER) =

[projected throughput(s) x target SEC(s)] [projected throughput(s) x 2008 SEC(s)]

expected energy consumptionreference use (baseline adjusted for expected throughput)

• Energy efficiency = Specific Energy Consumption (SEC) =

energy consumption, GJthroughput (eg: in tonnes)


Novem approach is free of product mix distortions

Relative energy ratio =

2013/14 energy consumption reference energy consumption

Site target EER = 3.0 / 3.0 = 1.000

P.mix approach EER = 15,000 / 18,000 = 0.833

E.cons Output SEC E.cons Output SEC Ref Cons

GJ tes GJ/te GJ tes GJ/te GJ

P1 6,000 1,000 6.0 12,000 2,000 6.0 12,000

P2 6,000 3,000 2.0 3,000 3,000 1.0 6,000

Total site 12,000 4,000 3.0 15,000 5,000 3.0 18,000

2008 base data 2013/14


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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