crc energy efficiency scheme
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CRC Energy Efficiency Scheme. Aberdeen, 26 th May 2010 Simon Francis, DECC CRC Team. Why CRC?. To incentivise energy efficiency in large energy users BECAUSE users are not taking up the energy savings which would save them money - PowerPoint PPT PresentationTRANSCRIPT
CRC Energy Efficiency Scheme
Aberdeen, 26th May 2010
Simon Francis, DECC CRC Team
Why CRC?
To incentivise energy efficiency in large energy users
BECAUSE users are not taking up the energy savings which would save them money
• Mandatory participation for large energy users - those who spend ≈ £0.5m a year on
electricity
• CRC will create greater reputational drivers for organisations to act - Performance League
Table
• Financial drivers – cost of allowances and revenue recycling (but those of CRC are a
fraction of the savings from reduced energy bills)
Key points
• CRC mandatory energy efficiency scheme which will :
• Incentivise energy efficiency and reduce energy use
• Foster behaviour and infrastructure change
• Deliver carbon emissions reductions
• CO2 emissions reduction ensured by cap
• Method of reductions determined by participants
• Revenue neutral to the Exchequer
• Designed to avoid overlap with emissions covered under EU
ETS and CCAs
For determining qualification & participating, undertakings will be
grouped under the highest parent undertaking where the ‘parent’-
•Holds a majority of voting rights in an undertaking
•Has the right to appoint or remove a majority of an undertaking’s board
of directors
•Has the right to exercise a dominant influence over an undertaking(see Section1162 of the Companies Act 2006 for full text)
Where there is no parent relationship as above, the undertaking must
assess CRC qualification in its own right.
Organisational structure
1. Organisation has at least one Half-Hourly (HH) Meter settled on the HH Market
Qualification
2. Organisation HH electricity consumption exceeded 6,000 MWh over the course of 2008
• HH electricity use must includeo Mandatory HH meters
o Voluntary HH meters
o Remotely read AMR
o Pseudo HH metering readings
• Policy intent – to incentivise energy efficiency regardless of where, how and by
whom the electricity was generated
• Therefore large electricity users need CRC allowances at the point of deemed
supply under CRC – this is in addition to any EU ETS (or CRC) allowances
required at point of generation
• Participants will not have to surrender CRC allowances for EU ETS ‘permitted
emissions’
• Participants may have to surrender CRC allowances for electricity supplied to an
EU ETS installation (if core or on RML)
• Electricity Generating Credits available in limited circumstances for non-EU ETS
installations.
CRC - electricity supply & generation
Supply definition one
• ‘A’ agrees with ‘B’ that ‘B’ will supply electricity to ‘A’ and that ‘A’ will pay ‘B’ for that
supply
• ‘A’ receives a supply further to that agreement
• The supply is measured by a metering device * or is a dynamic supply
OR...
Supply definition two (‘self-supply’)
• Where a public body or undertaking supplies electricity to itself for purposes other
than generation, transmission or distribution of electricity.
* not relevant for fuels
CRC supply rules (applicable to electricity,
gas and fuels)
1. Overview EU ETS installation
Customer responsible for surrendering CRC allowances if a core supply or included in residual measurement list (RML)
Meets supply definition 1
Electricity: Doesn’t meet supply definition 1
Not a supply under CRC: no CRC allowances
No Electricity Generating Credits (EGC)
operator of EU ETS installation
customer
Supply definition 2 (‘self supply’) – operator needs CRC allowances for own electricity use unless licensed/exempt activities.
operator of non-EU ETS installation
customer
Input fuel classified as supply if core gas or fuel source listed on RML – responsibility of operator (zero if renewable)
Operator may be eligible for EGCs from value of electricity generated – if no ROCs/FITs claimed and supply/self-supply definition met
Electricity doesn’t meet supply definition 1
Not a supply under CRC: no CRC allowances
Electricity meets supply definition 1
Customer responsible for surrendering CRC allowances if a core supply or included in residual measurement list (RML)
Supply definition 2 (‘self supply’) – operator needs CRC allowances for own electricity use unless licensed/exempt activities.
2. Overview non-EU ETS installation
Supply rules – participants & undertakings
CRC participant boundary
Undertaking 1 Undertaking 2Can’t be self-supply (def 2). Potentially ‘supply def 1’
Potentially self-supply (def 2)
EGCs potentially available at the participant level for either supply or self-supply
Emission coverage – core sources
• All half hourly meters
• Meters profile classes 5 – 8
• Daily-read gas meters
• Hourly gas meters
• Non-daily metered gas > 73,200 kWh/annum
Emission coverage 90% rule
• 90% of Footprint regulated by either EU ETS, CCA or
CRC (the ‘Residual Percentage’)
• Core Sources included on mandatory basis
• Must include non-core sources to reach 90%
• Can include non-core sources voluntarily if above 90%• Recorded on the Residual Measurement List
Excluded from CRC
• Transport energy use
• Domestic energy use
• Energy not for own use (except Landlord/tenant)
• Energy not for supply in the UK (* def. of UK includes UK coastal waters and the
UK sector of the continental shelf)
Key components of the CRC
Penalties
• Scheme has financial penalties which are proportionate to the offences.
• Failure to comply with key obligations
• Criminal offences in the case of falsification or non-compliance with
enforcement.
Key components of the CRC
Revenue Recycling - Performance League Table
• Adds financial and reputational incentives
• Based on 3 weighted metrics:
i. voluntary early action metric (Extent of voluntary AMR and extent of
Carbon Trust Standard or recognised equivalent)
ii. compulsory absolute metric (Change in annual emissions relative to
preceding 5 year average)
iii. voluntary growth metric (Change in emissions per unit
turnover/revenue expenditure)
• Bonus or penalty payment based on position in league table
November
2008 2009 2010 2011 2012April
July
October April
July
October
July
1st sale of allowances
• 1st Annual Reporting Year • Start of the Footprint Year
Start of the Introductory Phase
2013
1st Recycling payment
Footprint Report due
3rd Annual Report due
2nd Recycling payment
2nd sale of allowances
Timeline – Introductory Phase
1st Annual Report due
Allowances surrendered for 2nd year
Allowances surrendered for 3rd year
EA sent letters on qualification guidance to organisations with mandatory HHM.
Start of Registration PeriodLasts until 30 September 2010
2nd annual reporting year
Start of QualificationLasts until 31 December 2008
Start of 3rd annual reporting year
2nd Annual Report due
Further information
DECC CRC web pages
http://www.decc.gov.uk/crc
EA CRC web pages
http://www.environment-agency.gov.uk/crc
Any further queries