Carbon and energy newsletter - July 2021
This month saw the publication of the Climate Change Committee report on Climate Change Risk in the UK. The report highlighted that adaptation action has not kept pace with the reality of climate risk and that, although the UK has the resources to respond effectively to climate change risks, it has not yet done so. Crucially, it also points out that acting now will be cheaper than waiting to deal with the consequences. Other news across carbon and energy is summarised below:
Government Suppliers Required to have a Net Zero Target
Earlier this month the UK Cabinet Office published a new purchasing policy (PPN 06/21). Under this policy, any suppliers bidding for a major government contract (worth over £5 million per year) will be required to provide a Carbon Reduction Plan which confirms the organisation’s commitment to achieving Net Zero by 2050. This will take effect from 30th September 2021. If this is likely to impact on your organisation, and you do not have a Net Zero strategy in place then you should take action to develop this immediately. Further information can be found here.
UK ETS Allowance Price
The first auction of allowances for the new UK Emission Trading System (UK ETS) took place in May. There had been much speculation as to what the price point was likely to be but in the end the UK allowance clearing price was £44, broadly in-line with the EU ETS Allowance price at the time (around €50). The government also confirmed details of the Cost Containment Mechanism (CCM), designed to maintain a level of parity between the two schemes. Put simply, under this system, action will be taken to contain the UK ETS Allowance price if, for three consecutive months, the price is more than double the average EU ETS Allowance price for the preceding 2-year reference period. Further information can be found here.
Latest Carbon Conversion Factors Published
Defra/BEIS has published the latest set of conversion factors for use in the reporting of GHG emissions. The conversion factor associated with the use of electricity from the national grid has continued its downward trend and is now just 0.212kgCO2e/kWh, a 9% reduction compared to the previous year, following the trend from 2020 which also saw a 9% reduction on 2019. This is due to a further decrease in the use of coal powered generation, as it is replaced by increased levels of renewable energy generation. Other changes include revisions to the reporting factors for some materials (including glass and electrical goods), and the addition of new factors for a broader range of biofuels. The full set of conversion factors can be found here.
Climate Change Agreements – Amendment Window
The Environment Agency have now published the details of the Target Period 5 (TP5) amendment window. The Amendments Window runs from 1st July 2021 to 30th September 2021. During this period, variations can be submitted to the CCA register for the following changes affecting TP5:
Mandatory changes to replace estimated with actual data for the TP5 base year. This will only be applicable to those agreements where their CCA sector association does not hold accurate or complete data for the period 1st January – 31st December 2018.
Optional changes to align improvement targets with individual operators’ circumstances. The main two optional changes are the ability to change from an ‘absolute’ to ‘relative’ energy target, or for new sites that entered the scheme in 2021 for the first time to ‘bubble’ with an existing agreement held by the same legal entity.
If you think either of these circumstances applies to you, please contact your CCA sector association in the first instance.
The end of the ‘traditional’ lightbulb moved a step closer as the UK government announced that the sale of the majority of inefficient halogen light bulbs will be banned from September 2021, and the sale of high energy fluorescent light bulbs will be phased out, with plans to end to their sale from September 2023. Most organisations have already embraced low energy LED light fittings, but you may want to accelerate any lighting upgrade plans following this announcement. Further information can be found here.
SLR’s Carbon & Energy Management team can provide support in all of the above areas of carbon and energy reporting and management. If you need any assistance or require further information, then please get in touch.