1. The CRC Energy Efficiency Scheme (CRC) Challenge Henry Garthwaite, Business Development Manager Carbon Trust Standard October 2009

2. Introduction CRC Policy Context Business opportunities Practical next steps Agenda

3. Our mission is to accelerate the move to a low carbon economy We cut carbon emissions now By providing business and the public sector with expert advice, finance and accreditation By stimulating demand for low carbon products and services We cut future carbon emissions By developing new low carbon technologies through project funding and management, investment and collaboration By identifying market barriers and practical ways to overcome them

4. Introduction CRC Policy Context Business opportunities Practical next steps Agenda

5. UK has 80% absolute GHG reduction objective by 2050 (~3% pa) –All sectors of the economy must contribute Energy intensive industry/utilities already focused and regulated: –CCAs –EU ETS Large non-energy intensive industry (and public sector) less focused historically: –Energy a small part of the cost base –Distributed, building energy use –Difficult to get senior mgmt buy-in –Lack of awareness, transaction costs 4MtCO 2 pa saving by 2020 from 5000 CRC organisations The Policy Challenge

6. Total 54 MtC Not covered by EU ETS, CCA UK business and public sector emissions (2002)

7. Coverage: –Direct emissions (fuel use) –Indirect emissions (electricity use) – key to efficiency in building stock –5000 largest organisations – beneath the EU ETS/CCA threshold Requires senior engagement: –Senior mgmt engagement: organisational structure, strategy, approach –Financial impact: budgeting + emissions reduction planning –Reputation impact: PR/comms –Legal impact: audit + compliance, evidence pack, spot checks + penalties Cost-efficient carbon savings: –Carbon trading means lowest cost savings are achieved –Guaranteed carbon savings outcome in 2 nd ‘capped’ phase The CRC policy response

8. What is the CRC? Mandatory emissions trading scheme focusing on large non-energy intensive organisations –Minimum ½hrly metered electricity consumption of 6,000MWh in calendar year 2008; equivalent to >~£500k spend –~5,000 organisations, equating to emissions of ~50 MtCO 2 not covered by the EU ETS and CCAs –Cover emissions starting from April 2010 Organisation based scheme, including direct and indirect emissions –Ultimate/nominated UK parent responsible for all subsidiaries’ emissions; including electricity and other direct fuel use HMT revenue neutral design –Auction, with proceeds recycled to participants

9. Introduction CRC Policy Context Business opportunities Practical next steps Agenda

10. Key opportunities Driving internal change: –Senior mgmt engagement + resources –Budget for carbon reduction projects –Focus on ‘cost of carbon’ Financial and reputational rewards, from effective carbon management: –Absolute and relative emissions reduction –Early action BUT: the biggest savings are from cutting emissions now – before the CRC: electricity cost ~ £150/tCO2

11. Good carbon management is key to seizing the CRC opportunity 1.Reduce direct emissions 2.Work with the supply chain to reduce theirs 3.Consider offsetting Consistent, accurate measurement (carbon footprinting) Project A Project B Project C Project D Project E Project F Key component: Construction of abatement cost curve Illustrative Focus of CRC

12. The Carbon Trust Standard - Recognition for real carbon reduction Why –Stakeholder communication –Employees, Customers, Government –Motivation for future action –CRC “Early Action Metric” Benefit Methodology –Independent, Transparent, Robust, Based on GHG Protocol Criteria –Actual footprint reduction over 3 years (Absolute or relative) –Management infrastructure to enable continued reductions www.carbontruststandard.com

13. Example certifications to date - 130+ certifications - 200+ customers

14. The Carbon Trust Standard is linked to initial CRC recycling payments 10% 20% 30% 40% * Or ‘equivalent’ N.B. Figures are based on draft legislation 10,000 tCO 2 e footprint (~£1m-£1.5m energy bill) –£120k allowances p.a. –£120k 1 st purchase –£24k at stake (2011) Achieving the Standard will: –Boost league table ranking –Increase cash back through recycling Achieving certification now gets 2011 benefit

15. Introduction CRC Policy Context Business opportunities Practical next steps Agenda

16. Practical next steps IssueNext step Timeline and Rules Read DECC CRC User Guide CRC footprint Determine org structure, investigate property ownership / leases, determine emissions sources Reduction + trading strategy Construct ‘MACC’ graph + prioritise projects Early action Contact Carbon Trust Standard team, evaluate AMR Budget Engage finance team Compliance + evidence pack Engage legal and finance team Reputation Engage senior mgmt + PR Mobilise your team – across the organisation

17. www.carbontruststandard.com Henry.Garthwaite@carbontrust.co.uk 0800 019 1443