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Financial Implications of the Carbon Reduction Commitment
for the Private Sector
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The CRC Network Website
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Over 500 Over 500 registered registered
members to members to datedate
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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
© British Telecommunications plc
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
© British Telecommunications plc
ICT enables other industries to reduce footprint
Source: The Climate Group and GeSi: Smart 2020 (2008)
Global Emissions in GtCO2e p.a.
© British Telecommunications plc
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
© British Telecommunications plc
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
© British Telecommunications plc
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
© British Telecommunications plc
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
© British Telecommunications plc
• 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
© British Telecommunications plc
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
© British Telecommunications plc
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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