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Implications of the Carbon Reduction Commitment

for the Public Sector

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The CRC Network Forum

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Guest Speakers

Introduced by Paula Sussex, Head of Business Consulting, Atos Origin

Jenna Owen – Senior Policy Advisor – DECCOverview and update of policy and legislation

Karen Lawrence – Project Manager – LGiUPreparing for the Carbon Reduction Commitment in local authorities

James Pitcher – Climate Change Manager – TfL London UndergroundCase study for London Underground; strategy, challenges, opportunities Karl Heidel – Communications Manager – NHS Sustainable Development Unit Reducing carbon in the NHS; strategy, challenges, opportunities.

CRC Energy Efficiency SchemeAn overview of the CRC and update on policy

Jenna Owen

07 October 2009

What is CRC?

• CRC mandatory auction based emissions trading scheme which will :

• Incentivise energy efficiency and reduce energy use

• Encourage behaviour and infrastructure change

• Deliver carbon emissions reductions

• Makes use of a cap and trade mechanism• CO2 emissions reduction ensured by cap

• Allows participants to decide where reductions take place

• Revenue neutral to the Exchequer• Designed to avoid overlap with EU ETS and CCA’s

Main changes as of October 2009

1. Single sale of allowances in April 2011

2. Greater flexibility in how organisations participate

3. Increased credit given for early action in second and third years

4. Equivalents of Carbon Trust Standard now recognised under early action metric

5. Technical changes to make scheme more effective and easier to implement

Main changes as of October 2009: Public Sector

1. Definition of Public Sector Organisation finalised:• any organisation designated as a ‘public authority’ under foi/foi(s)

2. Companies with public sector ownership participate with department they are owned by – can be disaggregated

3. All English universities will be grouped with their colleges, however flexibility on the manner of participation is provided

4. Mechanism for changes in the structure of government departments finalised

April 2010

April 2011

Oct 2011

1st Sale takes place

•Participants pay for forecast 2011/12 allowances

• 2011/12 allowances released to participants

•Government holds 1 year of scheme revenue

1st Recycling payments made

•All revenue from April 2011 sale recycled back

•Government holds £0 of CRC revenue

Spot Trading

Jul 2011 Report only for

2010/11

etc

April 2012

Jul 2012 Report on and

surrender allowances for

2011/12Oct

2012

2nd Recycling payments made

• Revenue from April 2012 sale recycled back

•Government holds £0 of scheme revenue

2nd Sale takes place

•Participants pay for forecast 2012/13 allowances

•2012/13 allowances released to participants

•Government holds 1 year of scheme revenue

First year of scheme: 2010/11

Second year of scheme: 2011/12

Third year of scheme: 2012/13

Sales/Revenue Recycling Timing

Performance League Table

• Participants awarded points score for each metric

• Weighted combined score determines position in

Performance League Table

• Weighting of metrics:

Year 1 Year 2 Year 3 Year 4-8

Early Action Metric

100% 40% 20% 0%

Absolute Metric

0% 45% 60% 75%

Growth Metric 0% 15% 20% 25%

Revenue Recycling - 1

• Baseline component– Payment proportional to 2010 CRC emissions– NOT to what is paid at the auction/sale

For example:

Total CRC emissions in 2010: 100 tCO2

Organisation X emissions in 2010: 1 tCO2

= Organisation X receives 1% of revenue raised in sales or auctions

• This is then adjusted by the bonus or penalty

Revenue Recycling - 2

• Bonus or penalty payment based on position in

league table

– Year 1 maximum bonus or penalty of +/-10%

– Year 2 maximum bonus or penalty of +/-20%

– Year 5 maximum bonus or penalty of +/-50%

Timeline

October

Qualification PeriodParticipants with at least one HH settled meter should determine their total HH electricity consumption.

The EA sends out information on

qualification guidance to all

half-hourly billing points

2008 2009 2010 2011 2012 2013

April

July

October April

July

October

CRC EES Scheme begins• Start of 1st compliance year•Start of the Footprint Year

Registration Period

2nd Annual Report due

Allowances surrendered

1st sale of allowances

Footprint Report due

1st Annual Report due

1st Recycling payment

Start of 2nd compliance year

2nd Recycling payment

2nd Sale of allowances

Start of 3rd compliance year

Start of Capped Phase

Any queriesCRCHELP@environment-agency.gov.uk

Government Responsehttp://

www.decc.gov.uk/en/content/cms/consultations/crc/crc.aspx

CRC Web pageswww.decc.gov.uk/crc

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Carbon Trading Public Sector

Karen LawrenceProject Manager, Centre for Local Sustainability, LGiU

CARBON TRADING COUNCILS

Top 5 actions to prepare for CRC

• Bring together expertise – a CRC team

• Review liability and risk

• Measure and monitor emissions

• Plan to reduce emissions

• Agree a strategy for buying and selling carbon allowances

For more information contact:

karen.lawrence@lgiu.org.uk or 020 7554 2875

19 May 2009April 10, 2023 20

April 10, 2023 21

Preparing for the CRC

Strategy, Challenges and Opportunities

James Pitcher, Climate Change Manager

Contents

• Transforming the Tube

• Carbon management

• Energy consumption

• Strategy, Preparation,Challenges, Risks and Opportunities

• Recommendations

London Underground

• Oldest metro system in the world – some parts dating back to 1860s

• Now operates 11 individual lines and serves 270 stations

• Length of network: 402 km / 249 miles • Passenger demand has never been higher

– More than one billion journeys annually

– 3.5 million journeys daily

Transforming the Tube

• Our plan to upgrade our lines will deliver almost 30% more capacity across the network

• Without upgrading the Tube– 40% more crowding at stations– Almost 30% less capacity

compared with today’s service– 10% slower journeys – Cost to the economy: £billions

• The Tube provides one of the most carbon efficient forms of transport

LU carbon management

• Strategic approach to climate change• Carbon and energy management a ‘Top 40’ project• Carbon a Strategic Performance Metric

• Carbon Emissions Reduction Plan• Embedding energy conscious behaviours• Energy efficient and renewable technology• Influencing the supply chain

• High-impact priority areas• Line upgrades• Energy sourcing strategy • Carbon reduction projects across our network

LU energy consumption

• Energy intensive• Largest consumer in London• 0.4% of all UK electricity

• Annual electricity consumption• 1 terawatt hour (TWh) each year• National Grid supply• 15% Good Quality CHP from National Grid

• Total carbon footprint• 750,000 tonnes CO2e• 82% purchased electricity • 68% train services

London Underground Emissions estate

Scope of Transport for London (Parent Organisation)

TfL non transport energy usage is 513,000 MWh per annum

£circa £3m year one outlay

TfL CRC Compliance Strategy

• Organisation• Common leases

• Data collection• Identified metering estate• Highlighted exclusions• Metering strategy developed• Addressing weak points• Considered estimated data

• Data management• Unified CO2 data management system• Ensured storage compatibility across LU• Established central point for collection

• Partnerships• Energy Supplier

Preparation

• Early Action Metrics

• Comprehensive record of emissions• Forecasted and modelled future carbon emissions• Monitor, assess and manage carbon emissions regularly

• Increased awareness• Board level understanding• Engage key stakeholders• Establish administration • Costs included within future business case development• Carbon and energy impacts included as part of all

business cases• Carbon as strategic metric for the business• Staff participation

Challenges

• Franchises and Tenancies• Transport for London has over 3000

tenants• Identifying CRC responsibility for franchises• Assessment of carbon emissions from these sources

• Organisational structure• Large network with many sites• Line Upgrades – large station projects • Complex electricity distribution network and metering estate

• Identifying inclusion• Accurate measurement of ‘transportation’ related emissions• Groundwater pumps, signalling and fans

Risks

• Reputational• Globally recognised brand• Direct comparisons with organisations

in different areas of industry

• Carbon Trading• Public sector trading concerns• Lack of technology

• Administration, audits and fines• ‘Lightly regulated scheme’• Fines system

Opportunities

• Cost Savings• Helps to deliver further savings

• Early Action Metrics• Carbon Trust Standard• Provision of automatic metering (AMR) across LU estate

• Recycling Payments• Internal energy efficiency revolving fund

• Energy Efficiency Projects• Strengthened Business Cases• Low Carbon Station Initiative

Recommendations

• Achieve board-level understanding• Engage staff and identify responsibilities• Establish a unified data management system• Maintain documentary evidence• Ensure CRC cost implications are part of future

business case development processes• Identify carbon as a key performance metric

tfl.gov.uk

Reducing Carbon in the NHS

Challenges

Strategy

Opportunities

NHS Sustainable Development Unit

• “…… at no point will patient safety be compromised by any attempt to reduce carbon since the NHS is there to save lives and improve people’s health.”

The Challenge

• The NHS SDU must take staff through transformational change

• Staff have a duty of care not only to patients but also to the environment

• The NHS has a detrimental impact on the climate – it’s part of the problem and has to be part of the solution

The Scale of the Problem

• NHS has 1.3 million employees

• 4th largest organisation in the World

• NHS budget 100 billion pounds

• 18 million tonnes of CO2 emissions

• 3.2% of total emissions in England

NHS SDU VISION

• An ambassador of sustainability around the World

• Create policy

• Empower staff to make a difference

• CRC – focus people’s minds on reducing energy and carbon footprint

NHS ENERGY

• 22% of NHS carbon footprint is down to energy use

• 4 million tonnes of CO2 a year

• 410 million pounds

Carbon Reduction and the NHS - Strategy

• Briefing to all NHS organisations

• Appoint a lead

• Energy consumption

• Cost benefits

• Financial / reputational implications

Carbon Reduction and the NHS -Challenges

Challenges – Energy Managers Concerns

• Energy managers want either CRC or ETS

• League Tables – worry over whether unfair due to the way the table position worked out

• Introduce trading – introduce the City – introduce artificially high prices

• Capital investment low in financial downturn

Carbon Reduction – Not a threat but an opportunity

• Focus on Energy

• Reduce energy demands

• Save money

• NHS more sustainable

• NHS Fit for the Future

Sustainable Development Unit

• Carbon Reduction Strategy “Saving Carbon, Improving Health”

• By 2015 a 10% reduction on 2007 carbon footprint

• NHS following Government targets

Carbon Reduction and the NHS

• Scheme will ensure climate change issues become a strategic priority at board level

• Enables the NHS to lead the way and help the UK respond to climate change challenge

Reducing Carbon in the NHS

Karl Heidel

Communications Manager

NHS SDU

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