Developing a future for the CRC Energy & Sustainability Network Industry Led Review by EIC and Acclaro Advisory 28 th February 2013 Sunil.shah@acclaro-advisory.com
About Acclaro Advisory We are an independent sustainability practice that provides policy • and strategic advice; Our relationship based approach develop long term partnerships • with our clients; We understand both the emerging policy trends and have the • technical experience to enable clients to implement practical and measurable solutions
Project Initiation Industry led project to capture options on how • the CRC Phase 2 and beyond should progress Project commenced in May 2012 following • discussions with HM Treasury and DECC Launched on 21 st November with Tim Yeo MP and • Alan Whitehead MP Key areas of focus: • – longer term approach rather than short term fix – higher level discussion of meeting the original CRC objectives – Understand the value and benefits to the Green Economy – Understand the level of admin burden
Behaviour Change Two main drivers to promote behavioural economics: • Report and payment requires Board level approval – Performance League Table – More accurate data collection and governance has been developed • The CRC is seen as a tax, which has missed an opportunity to • stimulate investment in carbon reduction and raise the profile at Board Level
Performance League Table The concept of the PLT is considered positive and should • ultimately demonstrate performance / good asset management and enable: – Benchmarking of CSR performance – Peer review by organisations to gain competitive advantage with meaningful information – sectorising including an undifferentiated list – Provision of a full list, using trade names and full details to enable market and media analysis – Provision of a series of mandatory and optional metrics tailored towards sectors – Media interest through the provision of useful information and data
Carbon Pricing Revenue from the CRC through the 5-year plan and OBR to • generate £1bn in 2014/15 Need to provide a longer term price certainty for the CRC to • enable investments to be made Balance prices to account for the decarbonisation of the grid, • reduced energy use and raising of revenue
Carbon Reduction
Carbon Reduction
Trading System Trading is a requirement of the CRC underpinned by the Climate • Change Act. However, there is uncertainty from respondents on how this may operate Fixed price credits purchased at the beginning and end of the • year – based upon long term carbon process Incentivised forecasting of consumption •
Energy Efficiency Development of a grant funded body that provides an oversight • function, supports equipment to ensure consistency and best practice Body similar to WRAP, which has successfully demonstrated • economic growth and tangible improvement in resources Investment will help to: • – Prioritise capital projects due to reduced payback times and potential savings that can be achieved – Provide an immediate job creation role for the retrofitting of equipment and technologies from the construction sector – Drive innovation across the UK to develop energy efficient technologies backed by the desire to purchase these systems
Consultation Response DECC response to the CRC Simplification consultation released in early December • 2012 and Chancellors Autumn Statement announced a number of changes. Simplification to save 55% of costs on average – some will win, others will not • (property sector hit) The PLT will be abolished. A data table will be published comprising aggregated • energy use and emission data, enabling organisations and industry to see performance directly and in comparison to peers. This may retain an aspect of the reputational risk the CRC was designed to meet. The tax element of the CRC introduced at Spending Review 2010 will be a high • priority for removal when the public finances allow raising the potential for revenue recycling Long term carbon pricing - £16 per tonne of carbon dioxide in 2014-15 and will • increase in line with RPI from 2015-16 Reducing overlap with the CCA and EU ETS – sites which include CCA facilities or • ETS installations will be removed from the scope of the CRC.
Consultation Response Reducing the number of fuels that participants have to report against from 29 to • 2 (electricity and gas for heating) Withdrawing all state-funded schools in England from the scheme. • Government will consider how the CRC can incentivise the uptake of new onsite • renewable self-supplied electricity. Two fixed price allowance sales – a forecast sale at the beginning of the year and • a ‘buy -to- comply’ sale after the end of the reporting year. The forecast sale price will be lower than the end of year sale to incentivise forecasting. Prices will be set through the budget process Reduced reporting will be required with only one annual reporting 2013/14 and • the abolition of footprint reporting. Records also only need to be kept for six years More flexible disaggregation, with any subsidiary undertaking able to disaggregate • for separate participation. The Government will review the effectiveness of the CRC in 2016 •
Summary The CRC is seen as having had a positive impact on the data • collection and governance of energy management But is a missed opportunity to drive behavioural change within • organisations to reduce carbon emissions Tweaks and amendments, in line with the consultation, will • improve the CRC – funding through an oversight body, long term carbon pricing and a robust PLT HM Treasury have reviewed alternatives to the CRC • Need for some stability in the CRC without further regulatory • intervention
Next Steps Further industry led project to develop a practical model for a grant funding body: Maximise green economy benefits and job creation through • targeted spending of a grant funding scheme focused on energy efficiency; Introduce an oversight body to provide targeted support at the • technology and delivery level; Align the CRC with local bodies, including LEPs and City Deal • Groups, to promote efficiency programmes; Improve governance structures including, for example, data from • energy suppliers and apportion costs between landlords and tenants.
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Many thanks for your time. Developing a future for the CRC? Energy and Sustainability Network 27 th February 2013 Sunil.shah@acclaro-advisory.com www.acclaro-advisory.com 07590 444 399
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