UK Climate Change Programme 2006 - JNCC - Defra

Business
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expected to obtain approval in the near future.
The Government is also in discussion with other
potentially eligible sectors.
24. In order to continue to receive the discount,
facilities must achieve the energy efficiency or
emissions reduction targets set out in the
agreements. Performance is tested every two
years up to 2010.
25. At the second target period in 2004, sectors
again performed well against their targets, with a
total of the absolute savings from each sector
compared to its base year of 3.9 MtC (14.4Mt
CO 2
) per annum. Although in the first target
period in 2002, a large proportion of the savings
were a result of reduced output in the steel
sector, in 2004, output had risen by 28 per cent
over the 2002 level, and is forecast to rise further
up to 2010. Nevertheless, energy use in the steel
sector rose by only 10 per cent, indicating that
the steel sector is continuing to improve its
energy efficiency.
26. Targets for 2006 to 2010 were reviewed during
2004 and 2005 to ensure that they continued to
represent the potential for cost-effective energy
savings taking into account any changes in
technical and market circumstances. The review
took into account the better than expected
performance for the majority of sectors in the
first target period. For the largest sectors that are
also affected by the EU Emissions Trading Scheme
(EU ETS), the revised targets were taken into
account in setting the allocations under the UK
National Allocation Plan.
27. The target reviews have, overall, resulted in
forecast additional savings by 2010 (over business
as usual) of 0.2 MtC above the 2.5 MtC
predicted in 2001. The additional savings from
sectors excluding steel is 0.4 MtC. The forecast
increase in production from the steel sector up to
2010 which is reflected in the targets allows a
net increase in emissions of 0.2 MtC for this
sector.
28. On the whole the ten sectors entering
agreements under the new energy intensity
criteria are smaller sectors in terms of number
of companies and energy use, even though they
are energy intensive. Estimated carbon savings
from these ten sectors could amount to 0.03 MtC
in 2010.
29. It is estimated that the climate change
agreements will, in aggregate, save 2.9 MtC per
annum by 2010. These savings are included in
the baseline with measures projections.
30. Around 500 installations in the first phase of the
EU emissions trading scheme are also at least
partially covered by CCAs. The UK has obtained
temporary exclusion for 331 of these, with the
remainder opting to go into the scheme. To apply
equivalent reporting arrangements with the EU
ETS, which is a requirement of the Directive, the
target units containing a temporarily excluded
installation will report their CCA performance
annually for the duration of the exclusion.
31. For those installations opting to enter the EU ETS,
there are overlaps in coverage with the CCAs. It
was necessary to avoid the situation where
companies would be able to sell a surplus arising
from the same emission reduction in both
schemes, or alternatively have to buy in both
schemes to cover the same shortfall. Industry
preferred a mechanism to net off the EU ETS
surplus from the CCA performance to the
alternative of taking out the EU ETS emissions
from the CCA target. This procedure is in place
for the first phase of the EU trading scheme, but
the Government is consulting the sectors through
the UK Emissions Trading Group on arrangements
for the second phase.